EUROPE- Standard & Poor’s is to begin consulting later this year on recent proposals to rate European pension funds in the same manner as it does in the United States.
The agency has produced financial ratings on US funds for a long time. “We’re considering whether or not it would be appropriate to have this service here in Europe,” says head of Equity research Jim Maclachlan.
Scheme ratings will be influenced by the financial strength of the plan sponsor and investment strategy, profile and performance.
Some industry professionals have questioned the target audience for such ratings but S&P says they will enable easy comparison of funds and will help inform trustees of the financial state of their scheme.
“Pension trustees have an interest in knowing how secure their pension scheme is, the level of underfunding that may exist and how secure the corporate ability to fund those obligations is,” says Maclachlan.
S&P has yet to make a commitment to introducing European ratings but it will begin consulting prospective clients after the summer holiday period is over.
“What has changed as much as anything is the perception of the risk and also the responsibility of trustees in the marketplace,” he says.