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The word on State Street

January 2016 sees the first step in our new investment and ‘at retirement’ approach as we move investment platform from Legal & General Investment Management to State Street Global Advisors (SSGA). Exciting times. Read on for our interview with Nigel Aston, Managing Director of SSGA and the Head of European Defined Contribution, part of the SSGA global DC franchise.

Tell us more about State Street Global Advisors…

State Street Global Advisors (SSGA) was established in 1978 but our roots go back much further than that – we were founded by US bank, State Street Corporation, which dates back to 1792.

We’re the second largest investment manager in the world and we partner with many of the world’s largest organisations. We help them, and the people they look after, reach their financial goals and we invest money for savers and investors. Our processes are very thorough and based on extensive research but we don’t just look at global investment markets and economies, we take into account the real lives of real people.

We’re big – we manage trillions* in assets around the world! The sheer scale of SSGA, our history and global reach puts us in a relatively unique position when it comes to delivering smart, innovative investment solutions.

*AUM reflects approx. $27.3bn (as of 31 Dec 2014) with respect to which State Street Global Markets, LLC (SSGM) serves as marketing agent; SSGM and State Street Global Advisors are affiliated. Please note that AUM totals are unaudited.

What makes SSGA unique?

Like The People’s Pension we believe our people are our greatest asset. We do everything in our power to help them do their jobs really well. Our business is really thriving and growing and this is mostly down to the great people we employ.

We firmly believe that innovative thinking, and sharing this with our clients, is the surest way to success. Our collaborative approach means we’re able to both anticipate and respond well to change.

We care! We have a global mission to help people save for the things that are really important to them. In pensions that means helping people to retire with confidence.

What experience do you have in the UK pensions market – especially in DC?

We’ve been managing assets for defined contribution (DC) clients globally for over 30 years. We’ve been in the UK since 1990, managing DC money most of this time.

We are the fourth biggest manager of DC assets in the UK. We have lots of clients in the UK and many of these are large household names. Through our partnership with one large UK DC provider, we manage assets for employees of around 40,000 employers.

Our mix of experience and expertise in DC helps us to continue to improve retirement outcomes for the millions of new DC savers in the UK.

What’s your company philosophy?

We innovate with purpose – we don’t just innovate for the sake of it. We focus on the needs of our clients and use our knowledge and experience to deliver better outcomes for them. Why not take a look at the SSGA history timeline

We look at the whole picture – we maintain regular contact with our clients and work hard to understand them, putting forward only the best, most practical solutions.

We’re research-driven – research is central to our beliefs and approach. Our ideas are based on sound theory and supported by strong evidence.

We’re collaborative – we keep talking to our clients and are open to new ideas – this puts us in a strong position when it comes to meeting the needs of our clients.

What’s your proudest moment as a company?

As a DC business, some of our proudest moments have been:

  • Topping $13bn dollars of DC assets managed in the UK
  • Working with The People’s Pension!
  • Launching our retirement investment solution – Timewise Target Retirement – in 2013
  • In 2015, we were awarded Index Manager of the Year by European Pensions

Tell us a bit about how your funds perform and the philosophy behind them…

We have a very broad business managing assets in almost every asset class, using many different investment management techniques. All this in most locations around the globe.

The philosophy behind the specific functions of our investment management business may differ (ie managing a passive global equity mandate will involve a different investment philosophy than an active fundamental equity mandate) they all feed into and follow our global mission to deliver smart, innovative investment solutions.

Tell us five fun facts about SSGA…

  1. We are the second oldest financial institution in the United States – US bank, State Street Corporation, dates back to 1792… the Bank of New York is only a few years older
  2. We were established on State Street – ‘The great Street to the Sea’ – the clipper sailing ship on our parent company logo reflects this
  3. State Street Corporation was the custodian for the first ever US mutual fund back in 1924
  4. SSGA’s European Head of DC (that’s me) has a love of guitars, he just wishes he had more time to play them!
  5. If you converted all the money SSGA manages on behalf of our clients into £20 pound notes, and stacked them on top of each other, you would have a tower around 5,500 miles high – that’s a little further than the distance from London to San Francisco where you’ll find our global DC head office.

What are you looking forward to most about working with us?

We’ve been so impressed by the enthusiasm and drive that everyone at The People’s Pension has – it’s even rubbed off on our own people. We’re keen to complement this with our philosophy of innovation, by looking at the whole picture, research-based approach and through the power of collaboration.

What are your New Year’s resolutions – personally, and as a business?

Personally – to get better at playing the guitar and stop getting upset when my football team loses (and no, I’m not saying who I support).

And as a business – to successfully implement our partnership with The People’s Pension and to meet the needs of your customers with the same passion and care as you do.

 


More on State Street…

Hear from Steve Delo, Chair of the Trustee Board of The People’s Pension, on the move to State Street Global Advisors – watch our short video:

Video: Trustee Talk: December 2015 – investment managers »

Technical Q&A

The reasons why you are making these changes?

The decision to switch investment platform has been taken by The People’s Pension Trustee Board, a group independent of B&CE who look after the pensions of 3 million people, and has been taken in order to make sure the Scheme remains fit for the future.

Switching investment platform is the first step in implementing a new approach that responds to the changing needs of members, the market and the pension freedoms that came into effect in April 2015. There will be lots more detail on our new investment approach in the coming months.

How will this move affect our investment strategy?

As a result of the move, and in the short term, there will be little change. The following will be unaffected by the switch:

  • Fund names
  • Unit prices
  • Investment objectives
  • Asset allocations
  • Risk profiles of funds
  • Indices tracked
  • Member charges

The following will change:

  • The underlying passive funds that we use to create the fund range for The People’s Pension, will now be managed by State Street Global Advisors rather than Legal & General Investment Management.
  • There will be a short platform switch period where we will be unable to make any new investments or disinvestments. This is planned to take place from Wednesday 6 January up to and including Monday 25 January 2016. We expect normal business to resume from 9am, Tuesday 26 January.

What if members are disadvantaged because their contributions or claims were processed later as a result of the platform switch?

We will mitigate the impact of this platform switch as much as possible. We have chosen a quieter period of the year to conduct the switch. It is our intention to have all claims and other affected processes well up to date before the switch takes place.

Both member and employer data and contributions can be submitted as normal, however contributions will be held as cash and invested at the next valuation date after the move takes place. The processing of individual member selected fund switches and payments out may also be delayed during this time. We will endeavour to minimise these delays.

What happens during this period when transferring pension schemes to The People’s Pension?

Members or employers transferring to The People’s Pension can continue to submit requests as normal, however any transfer payment received during this period will be held as cash and invested at the next valuation date after the move takes place. The processing of transfers in may be delayed during this time. We will endeavour to minimise these delays and will keep you informed.