State Street will continue to offer performance analysis to pension funds, but only if they also employ the firm as their custodian, according to council documents.
The performance-measurement service, provided to 85 of the 101 funds in the UK-wide Local Government Pension Scheme, is provided through State Street’s subsidiary the WM Company, which was restructured earlier this year. It has a database on council fund performance stretching back to the late 1970s.
State Street’s decision to pull the service has led to fears in the sector that this trove of information might be lost. John Finch, the chairman of the oversight board at the Brunel Pensions Partnership, which covers council funds in the southwest, said: “I am not sure what is happening to this data, and how it will be preserved.”
The London Collective Investment Vehicle, a gathering of 33 borough pension funds in the capital, has advised its members to demand their own historical data from State Street in a standardised format, according to council documents published by the borough of Kingston-upon-Thames.
A spokeswoman for State Street said: “After careful review and consideration, State Street has made the decision to discontinue providing performance measurement services to third-party clients in the UK and Netherlands, effective from March 2016.”
She added that clients who requested their historical data had been provided with it, but wasn’t aware of any efforts to collate it nationally.
Finch said that State Street’s move might be due to the UK government’s drive to consolidate the 89 council pension funds in England and Wales into eight multi-billion-pound pools. He said: “In a way, with the creation of the asset pools WM becomes less relevant.
“The pools will be publishing their own investment performance data, and the new actuarial comparisons [being compiled by central government on liabilities and deficits] may be more valuable. State Street may have taken the view this market is likely to shrink and it’s no longer viable.”
The spokeswoman for State Street said: “The decision reflects the need to focus on the delivery of our core services.”
The WM Company, which was acquired by State Street in 2002, sold its forex market-data business to Thomson Reuters in April and changed its name to State Street GS Performance Services.
The Edinburgh-based firm made profits of £8.3 million during the year ended December 31, on revenues of £16.5 million, according to its accounts filed at Companies House. It said the sale of the market-data arm would reduce its revenue by £10 million and its profits by £7 million, but it will continue as a going concern.