Funds’ millennium worries
Diminishing investment returns in the new millennium will be the biggest challenge pension funds face in the future, according to European scheme managers.
Responding to an IPE survey asking managers to score from a list of 12 major topics they will have to address in the coming years, fund managers say the clear danger, by some margin, is an environment of decreasing financial prospects.
The Y2K scare however, appears to be well in hand, trailing in at number 12 in pension fund managers’ priorities.
Globalisation is the second most preoccupying trend for schemes as the proliferation of mega mergers in the investment arena takes place around them; often meaning that a manager hired one year could belong to a completely different entity a year later.
The third biggest issue for managers concerns the future of the flailing euro, with the fear of political interference on pensions questions not far behind in fourth position.
While the impending European Commission directive on supplementary pensions and questions of taxation may have fuelled national sentiment, it appears that pension fund managers may have grown inured to the debate – placing it in the mid-range of importance.
And the ubiquitous wrangling over whether defined benefit and defined contribution will be the pension structure for tomorrow, remains lukewarm – not too urgent to go to the top of lists, but too important to forget about.
The old beast of inflation, while maybe not dead is certainly less of a worry for pension funds, relegated as it is to number nine in the list of crucial concerns for the future.
However, it appears that some of the wider debates in the pensions field such as socially responsible investment (SRI) may not have reached priority status for pension schemes – coming in at number 10 in the list.
Notably, despite preoccupations with the possible future strain on returns, alternative investment only limps in at number 11 in importance for plans. Hugh Wheelan