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Consultants: SPAIN

The new Spanish law on the externalisation of pension funds is keeping consultants very busy. By January 2001Spanish firms will have to externalise their employees’ pension liabilities through a pension plan or insurance contract.
Foreign consultancy players, who were not very welcome when they first broke into what then was an impenetrable market, have now found their place in the consulting scene. Aon Gil Y Carvajal, Buck Consultants, Hewitt, Watson Wyatt, Arthur Andersen and William M Mercer among others, are now controlling the market in terms of pension plans design, manager selection, ALM, performance measurement and actuarial services.
"Trustees and gestoras are using our services more and more," says Lázaro Villada, head of country at Mercer in Madrid. "Despite the fact that companies are trying to reduce costs, it is a very good moment for consultants."
However, the growth of consultants activities in Spain is atypical. "There is considerable work because of the huge transformation going on in the market," says Luis Buey at BBV Argentaria in Madrid. "The externalisation of pension plans and the move to defined contribution (DC) plans means a lot of work for actuaries, but once this period is over, consultants will have to focus on different products."
On the investment side the gestoras have their own advisory function and most of the work is done within the banking industry. "To be able to understand the Spanish market you have to realise that the big banks have participation in all the big companies," he says. "All the important gestoras are related to the banking industry. It is a very closed world."
Local consultancy firms are also seeing an increase on their business. Most of them are actuaries who has set up their own companies and offer a wide range of products, especially on the benefits side. "Local firms like ours are much more actuarial," says Manuel Peraita at Peraita & Asociados. "The trend is to move to DC plans which once established will not need much actuarial work. So we will have to focus on different products such as performance measurement and providing technical advise to insurance companies," he says. Paula Garrido

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