UK – The government’s recommendation that pension fund trustees needn’t become investment specialists is the most important aspect of the latest consultation papers to be published by the Department of Work and Pensions (DWP), according to the consultants Watson Wyatt.
Though Watson Wyatt supports the view that there needs to be some legislation reform to ensure trustees are familiar with investment principles, it believes forcing them to become specially qualified will distract them from their other responsibilities as a trustee.
“Trustees take on their duties diligently and bring a wide spread of experience and background to the pension fund industry. We believe it is best that these capabilities are supported by experts from a range of investment advisers,” says Nick Watts, European head of investment consulting at Watson Wyatt in London.
Global head of consulting Roger Urwin adds that the latest DWP paper only really serves to confirm the proactive trend seen recently among many pension funds to enrich their trustees investment skills, anyway. But he points out that not all have reacted positively.
“At the moment I can categorise the pension fund industry in two ways in respect to trusteeship and the Myners’ review. There are those that have already take on board Myners’ and the government’s investment principles by setting up internal discussion committees and then there are those that have remained rather complacent. So whilst there is nothing really new in the government’s latest paper, at least we know that we are moving in the right direction,” he says.
Urwin says that the changes in the pension fund industry will naturally have a knock-on effect for consultants. “Consultants will need to become more flexible in order to adapt to the changing needs of their pension fund clients. In particular we anticipate playing a bigger part in investment consultancy.”