Delivering the largest UK Pension OCIO Deal

An in-house investment management company, fully owned by our customer, a large UK-based defence manufacturing provided services exclusively to its associated pension schemes. With no external clients, the company operated solely within the group structure. In 2022, the parent organisation reviewed the strategic role of the internal investment function and decided to discontinue in-house investment services. As a result, the pension scheme trustees began the process of selecting a new provider to deliver an Outsourced Chief Investment Officer (OCIO) model. 

The key business drivers for the project were (and remain): 

• Large-scale financial asset management no longer considered a strategic core capability for our customer 

• The increasing complexity of regulatory environment 

• Providing better career opportunities for the specialist asset management resources  

• Improve scalability for the growing future pensions needs and obligations of the Company to their employees 

• Reduce both financial risk exposure and operating costs. 

The stakeholder landscape was complex, with sometimes conflicting objectives between the Company and the Trustees. In addition, there were many third parties to consider, with a particular challenge was the cultural change impact on staff transferring from our customer to a third party global investment firm, and as a result retention of key personnel became a key focus area.  Finally, as a Pensions Investment Manager, winding down a 25+ year old business operation, ensuring the retention and retrieval multi-year obligations are met and handed over, FCA permissions cancellation secured, all vendor contracts terminated and final settlements in place. 

The project was planned in four sequential phases: 

Selection of a third-party specialist financial asset management partner 

Pre-Contract: Due diligence, service definition, contractual/commercial agreement, and transition planning (including HR), leading to contract signature with the Preferred Bidder 

Post-Contract transition phase: achieving the transfer of assets, capabilities, services and people to the third-party investment management firm. 

The in-house investment management wind-down: unwinding regulatory obligations, and ensuring the business and associated IT infrastructure, data and facilities are decommissioned in an orderly fashion. 

Taking over control of the project from a Big 4 incumbent, Project One took the following actions to bring the programme back on track:  

• Stripped back and simplified the programme governance model and introduced a more standard programme approach underpinned by Lifecycle Management (LCM). 

• Captured the vision for the programme and socialised this clearly and often to all parties and stakeholders. 

• Led programme planning and control from the centre, leaving the SMEs and project teams to focus on outcomes and delivery. 

• Involved all teams in milestone planning, developing realistic left to right plans that all parties could stand behind. 

• Maintained a regular cadence of collaborative project meetings and stakeholder steering meetings and brought robust and engaging leadership and direction to these. 

• Identified risks to the delivery dates and built a robust mitigation strategy around these so that we could ‘go live’ even if some of the top risks materialised. 

Whilst the primary business drivers of the project were oriented around removing non-strategic capability and risk reduction for the Company, significant operational efficiency gains were also delivered, with the return-on-investment horizon improving to 1.5 years over the course of the project.  

At the point when the contract was signed between the Trustees and the third-party investor, the Trustee side sponsor commented: “A fantastic achievement this week – we would not have got there by now without Project One’s leadership of the programme; I am sure of that.” 

They continued: “Thank you for all you have done. We would not have succeeded without Project One’s leadership and unstinting dedication to hard work.” 

The Chair of the Trustees commented: “I know it’s not over, but signing is a milestone and I want to personally thank you for Project One’s support, guidance and skill in helping everyone get to this stage.  I spoke to the third-party investment firm MD this week and he went out of his way to mention your contribution – it’s a great help. Thank you.” 

Following the transition and during the wind-down of the in-house investment business, upon securing the penultimate customer’s Lifecycle Management (LCM) assessment certificate, the Project Management assessor commented: “the project seems to be in a really good state post-transition and the team deserve immense credit for that being the case.”   

Project One value Add

Project One brought deep and broad change and delivery experience to provide a firm hand on the tiller to steer sponsors, staff, third parties and assurance functions through this first-of-a-kind project for the parent defence manufacturer and the Scheme Trustees. Critical to the success of the project were well-planned and managed communications across all stakeholders, acute focus on desired business outcomes, and careful risk management.