This is taken from the Daily Telegraph, November 25, 2006:

PENSIONS FUND FIRM AT RISK IN BBC
By Sophie Brodie

One of the City's longest standing investment relationships faces its biggest shake up as the BBC reviews its pension fund arrangements.

After more than 60 years, Schroders is understood to have lost its mandate to manage a significant portion of the BBC's £8bn pension fund.

A transition manager is understood to have been appointed to transfer the BBC portfolio which is thought to be worth between £600m and £800m.
It is not clear whether Schroders will continue to manage other funds for the BBC.

The move will come as a further blow to Schroders which has seen clients withdraw £6.4bn since the start of the year from its main funds.

Among the recent mandates lost was a £400m mandate from wealth manager St James's Place, which withdrew the funds after the departure of Schroders UK equity manager Ted Williams in the summer.

Schroders has struggled in particular with a period of lacklustre performance in institutional UK equities, which could be behind the BBC's review. The fund is currently overseen by head of equities Richard Buxton, who declined to comment.

The fund managers' share price has taken a battering in recent months amid concerns about the loss of institutional clients and moving into such specialist areas as commodities and hedge funds.

The price has tumbled from above £12 earlier this year to below £10, pushing the fund manager out of the blue-chip FTSE 100 index. The stock closed down 15½ to 966p on Friday. The BBC fund has 21,000 active members, paying £100m a year. More than 20,000 retired staff benefit.

At the end of March 2005, the fund was valued at £6.4bn, up from £5.9bn a year earlier. Despite this, performance had been disappointing. Its total return for the previous 12-month period was 10.8pc, below its benchmark figure of 11.6pc. From 2000 to 2005, the performance was 0.2pc which was below its benchmark of 0.5pc.

In April this year, the BBC announced it was closing its generous final-salary scheme to new members after a three-year actuarial review of its fund. Unions called for strike action but none took place and the BBC raised the retirement age from 60 to 65 for staff under 50.

At the time, the broadcaster's retirement fund reported a net deficit of £422m under FRS17 accounting rules. Investments then were split 60pc in equities, 30pc in bonds and 10pc in property. But, as of yesterday, the fund was worth £8bn and was fully funded, said to a spokesman.

In the 1990s, BBC pension fund trustees brought in other managers to work alongside Schroders including Mercury Asset Management, now owned by Merrill Lynch, and M&G, part of Prudential. They also moved away from active fund management, putting 10pc of its portfolio into a tracker fund run by State Street and handed 5pc each to Henderson and Rothschild to put into bonds.

Schroders and the BBC declined to comment.