Spanish companies continue to focus on the externalisation pro-cess and the consultants' main stream of business is not on the investment side but on the design of plans, the valuation and control of plans and on the rules and regulations affecting plans of which there are many. The who's who of key international players have all established themselves in the Spanish market and have been receiving more interest from the multinationals or their subsidiaries, who have been looking for something a bit different," says Ian Hinton at Woodrow Milliman, in part spurred on by the drop in bond yields which have made them look to alternative methods of financing their pensions assets through their insurance contracts. "Clients are trying to find ways of getting out of existing contracts they have got at the moment." The trend towards DC continues to run through the Spanish market as well, further boosting the international firms' business. On the regulatory front, the reduction in interest rates and in the rates of inflation has made quite an impact.
"This has made a lot of plans aware that their costs might vary as a result," says Henry Karston at William Mercer in Madrid. In terms of performance measurement, risk management and ALM, the market has still yet to wake up to these services, mainly due to the externalisation law which is yet to come into full force, which has been the main focus for Spanish companies. "That has not taken off as much or as quickly as I thought it would do," says Hinton. "There is still a fair amount of education which needs to be done in the marketplace to get across the importance of those issues."
While M&A activity has been low in Spain the international consultants have been on a recruitment drive for local talent, and there has been a trend of actuaries moving away from the insurance companies onto the consultants side of the market. The reign of the unions in Spain however, has meant that a fair amount of actuarial activity remains with them. "The unions have their own actuarial advisors, so that is something you come up against." The accountancy outfits have been active in the actuarial field, particularly Arthur Andersen and PricewaterhouseCoopers, though the international consulting firms have been placing more emphasis on marketing activity.
The gestoras in Spain obviously have their own advisory function so on the investment side continue to dominate the pensions market. Rachel Oliver"