NOVEMBER 18, 2024 | PIONLINE.COM | $16 AN ISSUE / $350 A YEAR
Kevin Fiscus
Face to Face
U.K. government retirement reform takes cues from Australia, Canada
CalPERS’ Gilmore to lean on strengths of the giant fund New CIO cites size, internal and external talent, and a long investment horizon as assets
B y SOPHIE BAKER
B y JULIE TATGE Stephen Gilmore takes a thoughtful pause before answering how he’d describe himself as an investor. The new CIO of the $528.8 billion California Public Employees’ Retirement System, Sacramento, has been on the job since July. Before joining CalPERS, he spent five years as CIO of the New Zealand Superannuation Fund, valued at more than NZ$76.6 billion ($45.7 billion). Gilmore settles on “fairly patient.’’ “As an investor at CalPERS, I really do want to focus on the strengths that we have. The market — it is hard to beat the market. But we have some areas that I would say are definite strengths,” he said, citing the size of the nation’s largest public pension fund. “We can probably do more things than others may be able to do, internally in some cases. We also have better negotiating power with partners. We also might have more influence. And that could lead to lower costs,’’ said Gilmore, who hails from New Zealand. Then there’s an investment staff of more than 300, a healthy number of external partners and a long horizon. “We’ve been around for a long time. We will be around for a long time, and that should
Regulation
IN THE DRIVER’S SEAT: CalPERS’
Stephen Gilmore
SEE GILMORE ON PAGE 32
The U.K. retirement system will undergo its biggest reform in decades, with Chancellor of the Exchequer Rachel Reeves announcing plans for further mergers of local government pension schemes and the consolidation of defined contribution plans into “megafunds,” in a move that aims to unlock £80 billion ($103.3 billion) in investment. Reeves outlined the changes — affecting retirement plans that are set to have about £1.3 trillion in total assets by 2030 — in her inaugural Mansion House speech Nov. 14, with the government also publishing its interim report for its retirement system review, announced in July. The aim is also for improved governance among retirement plans. Government analysis shows that retirement plans are better placed to invest in a wider range of assets — such as startups and infrastructure — once their asset size reaches between £25 billion and £50 billion, a government briefing note said. LGPS plans in England and Wales are set to have about £500 billion in assets by 2030, but the assets are currently split across 86 administering authorities, each with between £300 million and £30 billion. Local government officials and councilors manage each pension fund — although efforts have already been made to consolidate these pension funds into eight pools. The government said consolidating these assets into just a “handful of megafunds run by professional fund managers will allow solvod/Getty
SEE U.K. REFORM ON PAGE 29
SPECIAL REPORT CONSULTANTS
Who watches the watchmen? Independent evaluators horning in on consultants’ turf B y DOUGLAS APPELL For decades, investment consulting firms have maintained their perch as the prime gatekeepers of institutional portfolios, advising asset owners on manager selection, asset allocation and portfolio construction. But with consultants, in their guise as outsourced CIOs, now almost universally bringing their own
MORE ON CONSULTANTS n Consultants enjoyed another year of asset gains. Page 17 n Why are consultants moving into wealth management? Page 20 n For the full report, go to PIonline. com/consultants2024
dogs to the money management fight, the question of who can gatekeep the gatekeepers is taking on
growing relevance. The answer, increasingly, is “third-party evaluators” — boutique firms with expertise vetting OCIO providers and investment consultants that help plan sponsors sift through an ever-growing universe of competitors. The continued rise in the number of retirement plans considering OCIOs has found a growing number SEE CONSULTANTS ON PAGE 35
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