Decision details

The Provision of Pension Fund Custodian Services

Decision Maker: Director of Finance and Commerce

Decision status: Recommendations Approved

Is Key decision?: No

Purpose:

 

This report is to seek approval of award of contract in respect of the following:

 

Title of Contract: The Provision of Pension Fund Custodian Services

 

Contract Reference: CR/CORP/LCC/24/202

 

Brief Details of Service: Lancashire County Council (LCC) as Administering Authority (i.e., Lancashire County Pension Fund (LCPF)) seeks to appoint a professional custodian service provider for an initial 3-year contract with the option to extend for any given period up to a maximum of a further 3 years (6 years in total). This is a renewal of existing services.

 

On the 1st of December 2023 the decision to commence with the procurement activity was approved by the Pension Fund Committee.

 

The list below is not comprehensive, but a summary of the services to be provided by the Fund custodian.

 

•Hold LCPF's financial assets (likely in a digital depository) to protect them from being lost or stolen. They are responsible for recording the sales and purchases made by the fund, we trade in multiple currencies e.g. GBP, Euro, USD, Swedish Krona, Canadian Dollars etc.

 

•Purchase and sell bonds as well as make capital calls to the Pooled Investments.

 

•Provide monthly accounting transactions to allow LCPF Finance to update the general ledger for the investment transactions such as change in market value, sales and purchases.

 

•Provide monthly and quarterly investment reports showing the performance breakdown by asset over various timeframes (1 month + 1, 3 & 5 years) against the Lancashire portfolio benchmarks and Actuarial benchmarks. The performance report also compares the portfolio against the strategic asset allocations to ensure weighted properly and provides major indices performance such as the FTSE100.

 

•A requirement for the Custodian to work with the Authority's 3rd party investment management provider LPPI (Local Pensions Partnership Investments) as part of the ongoing contract.

 

Length of Contract: Initial 3-year contract with the option to extend for any given period up to a maximum of a further 3 years (6 years in total).

 

The contract will commence on 16th July 2024 and will end on 15th July 2027 (initial term). The option to extend the contract further will be decided at a later date by the Authority dependant on provider performance and future requirements.

 

Value: The estimated value of the current service is £70,000 per annum

 

Tender Exercise

 

I can confirm that a further competition process was conducted via the Public Contract Regulations (2015) compliant National LGPS Framework for

Global Custody Services (NCCT42038).

 

The further competition was followed ensuring compliance with Council Standing orders and UK Procurement Laws.

 

The Tender Evaluation Panel comprised of: Chris Ridings (Chair – Non-scoring), Sean Greene (Scoring), Paul Dobson (Scoring) and Paul Crotty (Scoring).

 

In addition, Junaid Laly and Reece Pearce supported the Chair in the compliance checks of the tenderer's submitted price files, which were then disclosed to the scoring panel members, once the quality evaluation element had been completed.

Bidders were evaluated on a Quality / Cost ratio of 80 / 20 as follows:

 

Bids Received: 4

 

The scores achieved following formal tender evaluation are detailed below:

*Quality - Part 1 (out of 62%)

Quality – Part 2 (out of 18%)

Cost (out of 20%)Final Score (100%)

 

BNY Mellon The tenderer was disqualified on the basis of a non-compliant submission.

 

CACEIS BANK39.4511.508.9259.87

 

NORTHERN TRUST42.9115.5020.0078.41

 

STATE STREET The tenderer was disqualified on the basis of a non-compliant submission.

 

*Please note Part 1 of the Quality Evaluation was a pre-scored element conducted by Mercer, working on behalf of the Framework Provider. All other elements were scored by the Authority.

 

Successful Bidder – The Northern Trust Company

 

Savings: There are no projected savings as the successful tenderer is the current incumbent provider to the Authority and the Pension Fund has compared the quoted fees within their tendered submission at around the same as what the Fund is currently charged. However, as confirmed in the results of the further competition the leading compliant bidder was also the lowest in terms of fees charged.

 

In addition, there is a one-off fee of £8,000 to use the LGPS Framework which has been agreed by both Lancashire County Pension Fund and LCC / Corporate Finance at approximately 80 / 20 split for their requirements under this contract.

 

 

Decision:

Neil Kissock, Director of Finance, took a decision to award a contract to The Northern Trust Company for the Provision of Global Custody Services for an initial period of 3 years, commencing on 16th July 2024 with option to extend for a further period of a maximum of 3 years. Following the conclusion of a further competition process, conducted by Lancashire County Council, via the Public Contract Regulations (2015) compliant National LGPS Framework for Global Custody Services (NCCT42038).

 

Divisions Affected: (All Divisions);

Contact: Neil Kissock Email: neil.kissock@lancashire.gov.uk Tel: 01772 534286.

Date of decision: 10/05/2024

Accompanying Documents: