Royal Mail hires investment expertise for DC plan

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The Royal Mail Pensions Trustees, who oversee the postal group’s pension schemes, have hired an investment expert from consultancy JLT to run the group’s £100 million defined-contribution scheme, in an unusual move for the industry.

Ben Piggott, formerly a senior manager researcher at JLT, will take up his post as scheme secretary to the Royal Mail DC Pension Plan at the start of May, according to a statement from the trustees.

Despite the increasing shift among UK companies from old-style final-salary or defined-benefit pension schemes to defined-contribution, it is still rare to find pension funds hiring in-house staff to work full-time on the latter.

DC plans often account for the majority of the workforce at companies that have introduced them, but their members tend to be younger on average and have not saved as much as their colleagues with DB pensions.

The bulk of the investment assets in the pensions industry are still held in DB portfolios, though most schemes are now closed. This means that in-house investment expertise also tends to be concentrated on running this money.

While Piggott’s investment skills will also be called on by team running Royal Mail’s £3.2 billion DB fund, led by chief investment officer Ian McKnight, his primary responsibility is at the DC plan.

DC funds in the UK are having to re-examine their investment strategies following the UK Chancellor’s radical overhaul of pensions tax in his 2014 Budget last month. Piggott’s appointment was finalised before this, but it will be one of the key challenges facing him as he takes up his post.

The DC pension scheme was set up in 2008 and is now the group’s primary pension scheme for new staff, with almost 40,000 members.

In January, the group agreed to increase contributions into the plan as part of a pay and pensions deal with unions, meaning it is set to grow in significance in the years ahead.

The hire follows the recent appointment of Australia-based alternative-investment expert, Bev Durston, to assist with the Royal Mail Pension Plan’s absolute-return and alternatives strategies.

Piggott is the latest departure from JLT, following the exits of Peter Ball, head of investment, and Paul Francis, director of investment consulting, in January.