The pension trustees of utility giant Eon have appointed Schroders Solutions as outsourced chief investment officer to the Eon UK Group of the Electricity Supply Pension Scheme, which has assets of about £3bn. 

The appointment was the result of a strategic review of long-term investment needs by the group trustee. Schroders took on the brief from mid-April and receives a percentage fee. 

Trustee chair Martine Trouard-Riolle, at Capital Cranfield Trustees, said: “We are delighted to appoint Schroders Solutions as principal investment manager following a highly competitive selection process. The proposition and the team put forward by Schroders demonstrated a strong balance of proven investment components and value for money.”

Ross Leach, lead OCIO strategist at the manager, said: “We are grateful for the trust placed in us and look forward to working closely with and delivering for the group trustee." 

Schroders will be guided by the statement of investment principles in managing the assets. The latest SIP shows that the scheme aims for 100% funding on a low-risk basis by 2036. It targets a return of gilts plus 2%, aiming to achieve this by investing in “a broader range of growth assets” while increasing the level of leverage within the liability-driven investment portfolio to be fully hedged. 

In the year to the end of March 2025, the Group’s asset performance was -4.4%, while the overall annualised return on assets in the past three Group years was -11.1%.  At the same time, liabilities also fell by about 11.6%. The last full valuation, in 2024, showed a technical provisions funding level of 101.1%. 

For all investment matters excluding niche assets, the trustees are advised by Cardano Risk Management alongside Schroders, while fund selection in relation to the niche assets portfolio is done by Cambridge Associates. Schroders also provides direct asset management. 

In March last year, the scheme had a range of managers handling LDI, credit, equities and multi-strategy and macro mandates. It listed BlackRock, Cambridge Associates, Caxton Associates, Dorsal Capital Management, Egerton Capital, Farallon Capital Management,  GoldenTree Asset Management, Insight Investment Management for LDI, JP Morgan Asset Management, Kadensa Capital, Metropolis Capital, Rialto Partners, Ruffer, Sands Capital Management, Towers Watson Investment Management, and Wellington Management Company.

Schroders has previously won a £740m fiduciary mandate from the Aga Rangemaster Group Pension Scheme and a £170million fiduciary manager brief from the Royal National Institute of Blind People’s Retirement Benefits Scheme. The Merchant Navy Ratings Pension Fund replaced WTW with Schroders as fiduciary manager in 2024. A year earlier, the firm was appointed as OCIO by the Kier Group trustees to manage £1.2bn.

OCIO mandates have become more common for very large schemes, where sponsors might not be able or willing to buy out but do not want to operate an in-house investment function – or where they have several international schemes they prefer to run under one roof.

For asset managers, it represents a chance to pick up large mandates of ‘sticky’ money in an otherwise shrinking defined benefit market. Aberdeen has even been willing to take on scheme liabilities along with being put in charge of pension fund assets, in a recent transaction with bus operator Stagecoach.