The agreement concerns the largest OCIO (Outsourced Chief Investment Officer) mandate awarded in the UK market to date. BAE Systems’ in-house investment team will join Goldman Sachs Asset Management and continue to provide investment services to the schemes. The transition of asset management and the team to Goldman Sachs Asset Management is expected to take place by the end of 2023.
The agreement provides continuity to the Trustees, who will benefit from Goldman Sachs’ global investment capabilities in both public and private markets while retaining the expertise of the existing in-house team. The agreement is expected to deliver performance and cost benefits for the schemes due to the increased scale and efficiency of Goldman Sachs as one of the world’s leading asset managers, overseeing more than £2.1 ($2.7) trillion in assets under management.
This agreement reflects the ongoing development of the pension market in the United Kingdom and is the largest OCIO mandate awarded in the UK to date. The appointment of Goldman Sachs Asset Management by the Trustees follows a highly competitive tendering process.
With this appointment, Goldman Sachs Asset Management’s position as the second-largest OCIO manager globally and one of the largest in the UK is confirmed, with a global OCIO AUM (Assets Under Management) of over £200 billion. Goldman Sachs Asset Management has demonstrated capabilities in Liability Driven Investing (LDI), Cashflow Driven Investing (CDI), sustainable investing, external manager selection, and private markets. The mandate also further enhances Goldman Sachs Asset Management’s position in the UK LDI and CDI markets, contributing to the approximately £175 billion it already manages globally in LDI and CDI portfolios.
David Solomon, Chief Executive Officer of Goldman Sachs, said, “We are proud of our partnership with BAE Systems and the Trustees to deliver this long-term solution, leveraging the full capabilities of Goldman Sachs for the BAE Systems pension schemes.” Marc Nachmann, Global Head of Asset & Wealth Management at Goldman Sachs, stated, “This transaction underscores both the extensive and unique capabilities of our business to navigate increasingly complex market cycles in public and private markets and our commitment to supporting our clients for the long term, in line with our focus on growing our asset management activities and footprint for our clients worldwide.”
Ed Francis, Head of UK Fiduciary Management at Goldman Sachs Asset Management, remarked, “This partnership underscores our deep commitment to the UK pension market and reflects our position as a leading provider of pension solutions to institutional clients across Europe. We are excited to welcome the team to Goldman Sachs – their expertise will continue to be of great value to the schemes and our broader client base.”
Andrew Gallagher, Chairman of the Trustees for the BAE Systems Pension Scheme and BAE Systems Executive Pension Scheme, said, “The internal management team has provided excellent stewardship of the schemes’ tailored investment strategies for many years. We are delighted that this agreement with Goldman Sachs Asset Management brings together the expertise of our in-house team with the full capabilities of Goldman Sachs, and we look forward to working together to continue delivering long-term value to our participants.”
Brad Greve, Group Finance Director of BAE Systems, stated, “Through BAE Systems plc’s proactive approach as the scheme sponsor, the Trustees, and the excellent work of our in-house investment team, the funding level of the pensions has gone from a significant deficit to a surplus. While we continue to explore ways to further reduce pension liability risks, reducing costs and enhancing the efficiency of asset management are essential. Goldman Sachs Asset Management offers both, and we are pleased that our in-house team will have access to the broader career opportunities available at such a global leader. The transition does not limit BAE Systems’ flexibility to explore further ways to reduce our pension risk, and we will remain dynamic in managing this risk in the future.”
