(Bloomberg) -- The Royal Mail Pension Plan is handing BlackRock Inc. an £8.8 billion ($10.9 billion) mandate to be its outsourced chief investment officer.

The world’s largest asset manager will lend its trading capabilities and technology to the pension plan, while using staff from the in-house investment team, according to a statement on Thursday. The plan pays for the retirements of 118,000 members who worked for Royal Mail, the UK delivery firm that was privatized in 2013 and renamed International Distributions Services Plc last year. 

BlackRock manages the savings of over 11 million people in Britain and has partnered with businesses as an outsourced CIO since 2005, Sarah Melvin, head of the UK business, said in the statement.  

Pension plans, especially those guaranteeing income levels for their retirees, have grown in size and complexity over the decades — in some cases becoming larger than the companies that founded them. To offset the financial risks and day-to-day administrative burden, many have shifted these tasks to life insurers and asset managers.

In 2021, BlackRock took over the management of £21.5 billion for British Airways’s pensioners, and last year it struck a deal to manage as much as $150 billion for American International Group Inc. In total, BlackRock managed $8.59 trillion at the end of December.

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The risks within pension funds were put under the spotlight last year when a spiral in UK gilt yields forced funds that used a liability-driven investment (LDI) approach to dump bonds to meet collateral calls, worsening the market slump. The Royal Mail Pension Plan is one of several funds the company established to pay for its former staff’s retirements, and mostly covers benefits earned since privatization. 

--With assistance from Silla Brush.

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