BAE Systems Pension Schemes Trustees appoint Goldman Sachs Asset Management for approximately £23 billion UK pension schemes mandate

6 September 2023

• The agreement marks the largest OCIO mandate awarded to date in the UK Market
• BAE Systems’ in-house investment team will join Goldman Sachs Asset Management

The Trustees of the BAE Systems Pension Scheme and BAE Systems Executive Pension Scheme (“the Trustees” of “the Schemes”) have outsourced the management of their approximately £23 billion UK defined benefit pension scheme assets to Goldman Sachs Asset Management. BAE Systems’ in-house investment management team will join Goldman Sachs Asset Management and continue to provide investment services to the Schemes. It is expected that the asset management and team transition to Goldman Sachs Asset Management will take place towards the end of 2023.

The agreement offers continuity to the Trustees, who will benefit from the global investment capabilities of Goldman Sachs across public and private markets, whilst maintaining the expertise of the existing in-house team. The agreement is expected to deliver performance and cost benefits for the Schemes through the greater scale and efficiency that Goldman Sachs can achieve as one of the world’s leading asset managers with more than £2.1 ($2.7) trillion in assets under supervision. The agreement reflects the continued evolution of the UK pensions market and is the largest Outsourced Chief Investment Officer (“OCIO”) appointment in the UK to date.

The Trustees’ decision to appoint Goldman Sachs Asset Management follows a highly competitive tender process. The appointment affirms Goldman Sachs Asset Management’s position as the second largest OCIO manager globally and one of the largest in the UK, with global OCIO assets under supervision of more than £200 billion. Goldman Sachs Asset Management has proven capabilities in liability driven investing (“LDI”), cashflow driven investing (“CDI”), sustainable investing, external manager selection and private markets. The mandate also expands Goldman Sachs Asset Management’s position in the UK LDI and CDI markets, adding to the approximately £175 billion managed by the firm globally in LDI and CDI portfolios.

David Solomon, Chief Executive Officer of Goldman Sachs, said: “We are proud to partner with BAE Systems and the Trustees to deliver this long-term solution, which brings the full capabilities of Goldman Sachs to the benefit of BAE Systems’ Pension Schemes.”

Marc Nachmann, Global Head of Asset & Wealth Management at Goldman Sachs, said: “As we focus on growing our Asset Management business and footprint for the benefit of our clients globally, this mandate reflects the extensive and unique capabilities of our business to navigate increasingly complex market cycles across public and private markets and our long-term commitment to supporting our clients.”

Ed Francis, Head of UK Fiduciary Management at Goldman Sachs Asset Management, said: “This partnership underscores our deep commitment to the UK pensions market and reflects our position as a leading provider of solutions for pensions and institutional clients across Europe. We are pleased to welcome the team to Goldman Sachs – their expertise will continue to provide significant value to the Schemes and our broader client base.”

Andrew Gallagher, Chair of Trustees for the BAE Systems Pension Scheme and BAE Systems Executive Pension Scheme, said: “The in-house management team has delivered excellent stewardship of the Schemes’ bespoke investment strategies over many years. We are delighted that this agreement with Goldman Sachs Asset Management brings together both the expertise of our in-house team and the full capabilities of Goldman Sachs and we look forward to working together to continue to provide long-term value for our members.”

Brad Greve, Group Finance Director, BAE Systems, said: “Through proactive actions of BAE Systems plc, in our role as scheme sponsor, the Trustees and the excellent work of our in-house investment management team, the pension funding level has moved from a significant deficit to a surplus. 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. This move doesn’t limit BAE Systems’ flexibility in exploring further ways of reducing our pension risk and we’ll continue to be dynamic in managing this risk going forward.”

Source: Goldman Sachs