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Mercer will no longer offer investment consulting services to US-based defined benefit pension plans

by Dami Sogunro

  • 18 Nov 2010
  • PE

Mercer recently announced that it will cease to provide its more than 20 US-based defined benefit clients with investment consulting services. Following a comprehensive review of its business strategy and changes in the public fund marketplace, Mercer opted to cease activity in this area of investment consulting. It will however continue to offer defined benefit pension fund investment consulting services to private DB plans and public ones outside of the US.

Some of Mercer’s current defined benefit clients have already begun searching for a replacement. The board of trustees at the $4.1 billion Employees' Retirement System of the City of Milwaukee is discussing the possibility of beginning the search for a replacement for Mercer, as are the board of trustees of both the El Paso City Employees' Pension Fund and the Ohio Bureau of Workers' Compensation, which are both likely to issue RFPs for general consultants in the coming weeks. The Public Employees' Retirement System of Mississippi has already issued an RFP and the Public School Teachers' Pension & Retirement Fund of Chicago will also likely be doing so shortly.

Other retirement systems that this decision affects are the Ohio Public Employees' Retirement System, Arizona State Retirement System, Indiana Public Employees' Retirement Fund, Fairfax County Police Officers Retirement System, Sacramento County Employees' Retirement System, and the Chicago Firemen's Annuity & Benefit Fund (FABF), which has also already issued an RFP for a general investment consultant.

Mercer will help all of its existing clients with their transition plans so they can identify another firm which can provide defined benefit plan investment consulting services.  One of Mercer’s defined benefit plan clients will still receive advice from the Marsh & McLennan subsidiary: the State of Connecticut Retirement Plans and Trust Funds will still be a client until September 2011, following a one-year contract extension in late Q3 2010.

Mercer is expected to focus its public fund investment consulting resources in both defined contribution and specialist consulting services, including its Mercer Sentinel services, a dedicated specialist global business group within Mercer Investment Consulting focused solely on evaluating and advising clients on non-financial risks - primarily operational and implementation risks. It will focus on evaluating and advising on alternative investments through its research boutiques.

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