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Investment Managers and Performance

Investment manager mandates

Investment manager mandates The mandates agreed with the investment managers set out performance targets over rolling three year periods and are shown in the table below.

The Scheme specific liability benchmark is calculated by the Investment Adviser, using prevailing bond yields, to reflect the change in value of the projected future cash flows of the Scheme provided by the Actuary (this is consistent with the Scheme’s Statement of Funding Principles).

• The above table excludes returns for the AVC and Protected Rights pooled funds.
• Performance has been shown against manager target at individual manager level, and strategic target at LMF/ABF, HPF and Scheme level.
• The Scheme’s assets have been and continue to be invested in a way that aims to reflect the variations in the value of the liabilities, as market long-term interest rates and inflation expectations change. In the past, this interest rate and inflation sensitivity has been reflected in both Matching Fund and HPF targets. From 1 September 2009, this sensitivity was removed from the HPF target. All the desired liability sensitivity is now targeted within the LMF and ABF by holding assets such as swaps and gilts whose value is sensitive to interest rates and inflation.
• The new HPF target is short-dated risk-free interest rate plus 3.0% p.a. which will tend to be a reasonably stable number over time. The LMF and ABF targets proxy movements in the liabilities and will be variable over time. They may be positive or negative depending on movements in interest rates and inflation. For example, for the year to 31 March 2010, the LMF and ABF target exceeded the HPF target.
• The performance of BlackRock, AXA and M&G include these managers' performance in the Matching Fund prior to creation of the LMF and ABF.
• The performance of the HPF includes GLG up to 31 December 2009, after which GLG is included in the performance of the ABF.
• Performance of total managed assets and of LMF/ABF both include the performance of the old Matching Fund prior to creation of the LMF and ABF.