Hugh Wheelan reports from the NAPF international conference in London

More than half of the UK's pension fund administrators and almost 40% of fund managers have made no preparation for the move to the single European currency next year, a report just released by the National Association of Pension Funds (NAPF) warns.

Published to coincide with the NAPF's recent London conference last month entitled 'Pensions in the Global Environment', the report says that with only four months re-maining there is an urgent need for schemes to increase their awareness of how Emu will affect funds and investment.

With UK pension funds' reluctance to take measures for Emu being seen as a sign that the single currency does not concern them, Anne Robinson, director general of the NAPF, launched into criticism of such insularity at the conference: The European pensions market will be transformed on January 5 1999, with the UK considerably affected, so such a lack of readiness is going to leave many funds with a future shrouded in uncertainty."

Expressing her disappointment that many schemes had not responded to NAPF prompting on the issue, she said concern for less important priorities could cost pension funds dearly.

"What surprises me is the extent of the 'laissez-faire' attitude amongst fund managers in the face of such changes, particularly when ourselves and the Bank of England are stressing the need to be ready, or risk losing out through lack of knowledge or missed opportunities in investment."

The report also reveals that 65% of fund administrators are unlikely to move to dual currency reporting next year, regarding its implementation as 'misleading' and 'useless'.

S imilarly, resistance to viewing the UK market as anything other than a separate domestic market, even in the event of the UK finally joining Emu, is still strong, with over 20% of fund managers excluding the notion of ever adopting a European benchmark.

And worryingly, a quarter of UK pension schemes fear the European market will collapse as a result of Emu, despite two-thirds feeling that the UK should not delay in adopting the single currency.

Consensus was reached though by administrators that the UK's non-participation in the Emu first wave will lead to increased unemployment and decreased inward investment into the UK. Fund managers echoed these views, adding they also foresee increases in outward investment from the country.

Overall, around 90% of schemes do believe the UK will eventually sign up to Emu, and in terms of investment performance UK pension fund managers were more bullish than bearish about prospects in the eurozone, with 64% declaring confidence in a strong euro.

But a majority still believe London to be the most important stock exchange in Europe, and consider that it will retain its position as such.

Ray Martin, head of group benefits at UK chemical multinational Zeneca says he is concerned that such a number of UK funds are unprepared for Emu, believing the issue should be firmly on the agenda.

"Personally I am very involved at Zeneca in euro preparations, and I think the multinationals are definitely ready, and rightly so. But there is a need at least for funds to ensure custodians and investment managers are set for January, so the lack of readiness in this department is particularly worrying."

David Gamble, investment manager at British Airways (BA) concurred that it was not sensible for UK funds to be in such an ill-informed position: "This is not rocket science, it is common business sense, and with such an enormous change happening on our doorstep UK pension funds should be in a better position to adapt to whatever happens in the future."

He explained that BA had been getting ready for two years now to ensure easier European co-ordination in investment.

p The failure of UK pension funds in preparation for the euro is also matched by UK companies showing an acute lack of pre Emu development in areas of communications, investment and human resources, says a survey by consultants Watson Wyatt.

Research carried out in association with Goldman Sachs shows over half the companies surveyed with non-Emu compliant accounting and benefit systems.

Paul Trickett, partner at Watson Wyatt said: "The euro will create challenges for all companies in the EU, regardless of where they operate, and these are critical issues that have not been addressed."

As a result, Watson Wyatt has launched a new 'Euro Manager' service to assist business planning and risk exposure before the single currency."