Pension AE Tender Published: Investment Management Providers for the Investment of the Automatic Enrolment Retirement Savings System

[Towger]

The long awaited and delayed tender for the Pension Auto Enrolment fund managers has been published:

European Dynamics - Notice & Tender Documents

www.etenders.gov.ie

 

[LDFerguson]

Some commentary in the Irish Times today...

State officially begins search for auto-enrolment investment managers

Primary focus in delayed request for tenders is on charge for managing funds that could grow to €21bn by 2035

www.irishtimes.com

 

[TheJackal]

Annex 1: AERSS Investment Management Provider Procurement Specifications​
	Item	Fund A​	Fund B​	Fund C​
1	Fund focus	Lower risk retirement savings arrangement​	Medium risk retirement savings arrangement​	Higher risk retirement savings arrangement​
2	Fund type	UCITS​
3	Design characteristics	A benchmark-aware approach to strategic asset allocation, unitised, open-ended, daily dealing​
4	Base currency	EURO​
5	Domicile	Ireland​
6	Management Approach	Passive Management​
7	Risk Levels	1 or 2 per Section 69 of the AE Act (e.g. ESMA)​	3 or 4 per Section 69 of the AE Act (e.g. ESMA)​	5, 6 or 7 per Section 69 of the AE Act (e.g. ESMA)​
8	Benchmark	To be proposed by Tenderer​	To be proposed by Tenderer​	To be proposed by Tenderer​
9	Hedging	Permitted​
10	Date of Inception	(a) The fund's date of inception must be at least three years prior to the tender submission date OR (b) In the event that the Tenderer proposes to establish a new fund specifically for AE, they must provide details of any existing fund/strategy being replicated. This includes, but is not limited to, the existing fund/strategy's date of inception (at least 3 years prior to the tender submission date), performance history, investment strategy and key characteristics to demonstrate alignment and comparability with the proposed AE-specific fund​
11	Permitted active risk relative to the Fund’s benchmark	Maximum 2%​
12	Investment objective	To replicate the performance of the benchmarks proposed as closely as possible, in the interest of AE Participants, ensuring low tracking error and cost efficiency​
13	Investment strategy	Provide passively managed UCITS in line with the specified risk ratings, the investment principles set out at Section 4.5 of Annex 2 and benchmarks proposed suitable for AE Participants​
14	Share Class	Accumulating​
15	Sustainability reporting	SFDR article 6, 8 or 9​	SFDR article 8 or 9​	SFDR article 8 or 9​
16	Stock Lending	Permitted in line with EU regulation Securities Financing Transactions Regulation (SFTR)​
17	Investment in other funds	Not Permitted​
18	Investment limits	UCITS regulations dictates the investment limits​
19	Leverage	UCITS regulations dictates the leveraging restrictions​
20	Derivatives	Permitted in line with the AE Act 2024 and as per UCITS regulations
21	Reporting	Daily unit prices and unit positions sent to the Managed Service Provider by an agreed daily deadline​
22	AMC	Maximum of 10bps on AUM​

 

[TheJackal]

6. Management Approach: Passive Management

I'd have thought it would be Actively Managed if the 3 investment managers chosen are deciding the mix that goes into the Low, Medium and High. Passive to me is low cost index funds and I'd be surprised if they offer those.

22. AMC 0.1%

The Annual Management Charge (AMC) quoted must be all-inclusive and be expressed as basis points to four decimal places on Assets under Management (AUM).

Tenderers must confirm that the AMC quoted in the Tender will remain valid for the duration of the 7-year contract with the possible 3-year extension as defined at section 1.4 to 1.6.

The AMC shall be fixed and free from fluctuations in exchange rates and other costs and no price variation shall be allowed for any rise or fall in the cost of labour, service provision etc. for the term of the Contract. An increase in the cost for fund administration, custodians and any other cost howsoever arising shall be borne by the Tenderer.

The AMC shall be charged to each of the Funds provided and deducted from the Net Asset Value (NAV). It is expected that the Investment Management Providers will calculate each of the fund’s AMC, which will be factored into the daily unit price sent to NAERSA (MSP) for each of the funds. No fees or costs may be charged to NAERSA or the Department of Social Protection. Investment Management Providers may not apply a performance-based incentive fee to any of the funds offered in this procurement process.

Tenderers must offer three UCITS funds, with a single Annual Management Charge (AMC) of no more than 10 basis points on Assets under Management (AUM). Tenderers with an AMC of above 10 bps will be disqualified from this competition and the Tender will not be evaluated.