Consultants in France provide their corporate pension clients with a number of services including manager selection and asset liability modelling (ALM). The French pensions industry is gradually becoming closer to the US pattern, with defined contribution (DC) plans taking over from defined benefit schemes.
But as it exists today, the shape of the whole sector is still far removed from the Anglo-Saxon model. Pension funds still do not officially exist in France, consultants say. The pensions industry is made up of pension agreements or arrangements.
“Pension_clients do use consultants in two ways,” says Dominique Piermay, vice president of French consultancy Fixage, “either for calculating their liabilities or helping to measure the performance of their investment managers.”
Consultants are asked to assist in manager selection and in ongoing monitoring of the mandate, she says. Advisers are used for their ability to pass independent judgement on asset managers and to control the risks the pension clients are exposed to.
Though nothing has changed dramatically in the past year, the investment consulting business in France has been growing. “There has been a growing tendency - those institutions have been requiring more and more investment consultancy,” says Piermay.
Also at play is a trend towards institutions with large pension schemes outsourcing the financial management. Companies seeking to do this will need the services of consultants, she says, not just on the administration side, but also in helping to choose which firms should be engaged to carry out the outsourced tasks and in offering financial investment advice.
Norbert Gautron of JWA Actuaries says his firm is often asked to value the liabilities of pension schemes and undertake ALM.
But a law passed last February which deals with ‘Epargne Salariale’ – profit sharing between employers and employees – has given rise to a new financial product available to companies. Some companies will use this new legislation to set aside funds to provide their employees with retirement benefits, he says.
Asset managers are enthusiastic about the new legislation, and the business growth the reforms will bring about for them. The reforms will force employers to offer their staff extended voluntary savings periods. At the moment, just one in three salaried workers takes part in these schemes and participation is not compulsory for companies which have fewer than 50 employees.
Fund managers expect large volumes of cashflow to be invested in medium and long-term funds as a result of the Epargne Salariale. Consultants will reap the benefits in their business too. “We have been asked by a few companies about how they could use this new legislation,” says Gautron.
Much of the work of an intermediary in the French pensions market, he says, is to supervise the contract the insurance companies provide, whether the scheme is on a DB or DC basis. “We set up or modify a defined contribution or defined benefit scheme and look at what the insurance company can do, from both technical and financial points of view.”
Piermay says there is a place in the French market for both smaller local consultancies and branches of the international operations. “I think we can both exist,” she says.
There is a need from clients for advisers with international reach, but also thorough local knowledge. “Our clients are getting more and more global and looking for global services. Of course actuarial services lies on the same basis everywhere – it is just mathematics – but I do think the local business is very important, because each country has very specific legislation,” says Piermay.

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