In the UK the use of independent custodians is stronger among public sector pension schemes than among private schemes, according to the National Association of Pension Funds' most recent survey of its members. While 86% of private schemes do use an outside custodian, compared with 75% of public schemes, the proportions changed when respondents were asked if the custodian was independent of the investment manager. Here 79% of the public schemes said yes, but only 63% of private ones did. The corresponding figures last year were 41% of public sector schemes, compared to 56% of private funds.

For the first time, the current survey looks at whether stock lending was allowed in portfolios. The numbers of public schemes with permission was significantly higher across all the markets mentioned: UK equities 33% public (19% private), overseas equities 33% (16%), UK fixed interest 13% (30%); overseas fixed interest 26% (11%).

The corresponding figure for using an outside custodian in the previous year's survey were 75% for private schemes and 61% for public schemes. The NAPF reckons that this understated the case significantly as some respondents using pooled funds obviously omitted to refer to this.

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