In what has been dubbed the largest Outsourced Chief Investment Officer (OCIO) mandate awarded in the U.K., BAE Systems Pension Schemes have tapped Goldman Sachs Asset Management to oversee its £23 billion ($29 billion) investment portfolio.
The deal has BAE System’s London-based in-house investment team joining Goldman Sachs Asset Management, according to a news release. The transition is expected to be complete by the end of 2023. The agreement is said to deliver performance and cost benefits for the pension funds through the greater scale and efficiency that Goldman Sachs can offer across both public and private markets across which it manages over $2.7 trillion.
Within its OCIO program, Goldman Sachs has more than £200 billion in assets under supervision. The team’s capabilities span liability driven investing, cashflow driven investing, sustainable investing, external manager selection and private markets.
“Through proactive actions of BAE Systems plc, in our role as scheme sponsor the Trustees and the excellent work our in-house investment management team, the pension funding level has moved from a significant deficit to a surplus,” said Brad Greve, group finance director at BAE Systems. “As we continue to look at ways to further de risk pension liabilities, reducing the cost and improving the efficiency of asset management are essential. Goldman Sachs Asset Management will offer both and we’re pleased that our in-house team will have access to the broader career paths available within such a global leader.”
Greve added that the move doesn’t limit the pensions’ flexibility in exploring other ways of reducing pension risk and that they plan to continue to be dynamic in managing this risk going forward.