The trustee of the KBR UK Limited Pension Plan has appointed Legal & General Investment Management (LGIM) as its new fiduciary manager, overseeing the pension investments of over 9,000 scheme members.

One of the largest mandates of its kind, the initial transition of over £1bn assets was completed by LGIM in December 2023.

As part of the mandate, LGIM will be taking over management of the scheme's strategic asset allocation, with the recent transition to a new segregated liability-driven investment (LDI) credit and bespoke growth portfolio placing a strong focus on meeting the scheme's requirements.

As fiduciary manager, LGIM's appointment is expected to offer the scheme increased operational efficiency within its collateral management processes, as more liquid assets are managed alongside LDI, increasing the resilience of the LDI portfolio to potential future gilt market volatility.

LGIM will also be assisting the scheme in the restructuring of its private markets portfolio to further improve portfolio liquidity in preparation for buyout.

Indeed, part of the mandate focuses on investing in bonds that are “matching-adjustment eligible” under the insurer Solvency requirements, with LGIM expected to leverage its expertise in endgame solutions to ensure the scheme is appropriately positioned to transfer liabilities to an insurance company when it buys out.

KBR UK Limited Pension Plan chair of trustees, Douglas Monk, explained that the trustee felt that it was the right time to review its investment arrangements given the scheme's maturity, confirming that the scheme selected LGIM following a “rigorous” selection process”.

“It was important that our fiduciary manager was able to carefully manage portfolio liquidity, and LGIM’s approach stood out in that regard,” Monk stated.

“Their ability to implement a bespoke buyout-ready credit portfolio puts the plan in a very strong position for the future.”

Adding to this, LGIM head of delegated solutions, Tim Dougall, said: “We are delighted to have been appointed as fiduciary manager by the KBRUKLPP, and look forward to helping the plan manage its endgame journey.

“We see many mature schemes looking to improve the liquidity of their investment portfolios, and it’s increasingly important for trustees to consider how best to structure their bond portfolios to seek to reduce risk on a buyout basis.

"We are very pleased to be bringing LGIM’s full expertise to support the plan as part of a bridge to buyout.”

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