New Hampshire Fund Appoints BNY Mellon for $6.5 Billion in Assets

BNY Mellon has won a five-year global custody mandate and onboarded the assets of the $6.5 billion New Hampshire Retirement System (NHRS), replacing Northern Trust, which had been the NHRS master custodian since at least 1987.

BNY Mellon will provide custody, accounting, foreign exchange, cash sweep and global risk services to NHRS. The pension fund previously engaged in securities lending with Northern Trust but ended this practice in January 2011 “due to the poor risk to reward relationship and the limited earning potential associated with this activity due to extremely low interest rates,” NHRS said in its 2011 annual report.

The decision to switch custodians was made by the NHRS Independent Investment Committee, which considered proposals from Northern Trust, State Street and BNY Mellon. The committee’s chair, Harold Janeway, said at the June meeting of the Board of Trustees that Northern Trust did not have the capacity to manage capital calls, cash distributions, and unfunded commitments—all three of which were considered critical to the decision. At that meeting, Larry Johansen, director of investments at the NHRS Board, said that a deciding factor was also the advanced technology capabilities of BNY Mellon and State Street. Janeway also noted as a side benefit that BNY Mellon’s location in Everett, Massachusetts would make face-to-face meetings easier.

The five-year contract includes a $500,000 annual flat fee, plus variable fees for ancillary services. In addition to the NHRS mandate, BNY Mellon also recently replaced Northern Trust as the global custodian for state pension funds in Hawaii and Kentucky.

NHRS is a contributory, public employee defined benefit pension plan. It has more than 85,000 members comprising state, county and municipal employees, teachers, police officers, and firefighters. NHRS has 475 participating employers—the State of New Hampshire, individual communities, school districts, counties, and others.