The 17 billion pension scheme for the UK railways, the Railways Pension Trustee Company Limited (RPTCL), has appointed ABN AMRO Mellon (AAM) as a new global custodian alongside one of the current incumbents, the Bank of New York (BNY). The departing provider is JP Morgan.
Following a detailed tender exercise carried out by Railpen Investments on behalf of RPTCL, the Trustee has made the new appointment of AAM as the second of our global custodians, says Frank Johnson, Finance Director at Railpen Investments. In addition the Trustee has reappointed BNY. We chose to continue with our two custodian model as this has proved a successful strategy and is part of our risk mitigation in relation to asset safety. Our approach to the selection process was to assess our needs against the capabilities of the major providers in what is an extremely competitive market. We last carried out a tender exercise six years ago and there have been many changes in the custody market in that time. Key differentiators between providers included core and value added services as well as financial standing, pricing, contractual arrangements and the quality of service. The review drew on the expertise of many people within Railpen Investments.
The Railways Pension Scheme and other pension schemes run by RPTCL have assets totalling some 17 billion, with equity and fixed income assets of approximately 14 billion, managed by some 20 external fund managers who will be working in close conjunction with the two appointed custodians.
Throughout the selection process we have been impressed by AAMs ability to meet our detailed Service Level Agreement that clearly sets out what is expected from the custodian in every aspect of their service delivery, say Johnson.
Nadine Chakar, CEO of ABN AMRO Mellon, says she is delighted that one of the UK’s best known pension schemes had appointed the bank as custodian. We are also looking forward to working with Railpen Investment’s provider of outsourced fund accounting services and supporting the investment managers employed by RPTCLs multi-manager approach,” she says.
On the reappointment of BNY, Frank Johnson says that their service performance has been entirely satisfactory over many years and is supported by strong and effective relationship management. They demonstrated a strong commitment to RPTCL when re-tendering in the competitive bidding process.
Tim Keaney, Head of The Bank of New York in Europe describes the re-appointment as testimony to [our] absolute commitment to this relationship. The pension fund sector is core to our business and we will continue to adapt to the changing demands of the pension fund industry and tailor products and services accordingly. Having the right staff is a key factor in retaining and winning new business and our specialist team here is proof of that policy in practice.
Chris Hitchen, Chief Executive of Railpen Investments, says the company has achieved improved commercial and contractual terms from both the incumbent being reappointed (BNY) and the new custodian (AAM) compared to the existing terms. As the pensions industry faces ever increasing challenges, the role of the global custodian is of vital importance. I am confident that our dual custodian model will ensure ongoing asset safety and represents value for money for our members.
Railpen Investments and Railway Pensions Management run the Railways Pension Scheme and other railway pension schemes including the British Railways Superannuation Fund and British Transport Police Force Superannuation Fund on behalf of the Trustee, Railways Pension Trustee Company limited. Railpen Investments oversees the investment of assets worth approximately 17 billion, which are placed with some 35 external fund managers and also manages investment, legal, and actuarial arrangements. The Railways Pension Scheme is one of the largest occupational pension schemes in the UK.