wo views of the past 10 years are possible. One is that, in Yeats' words, "all is changed, changed utterly". The events of September 11 2001 perhaps support this view. The other view is that nothing much has changed, that life continues much the same and people continue to make the same mistakes - whether they be investment managers, consultants or actuaries.

This month's Off The Record looks back over the 10 years of
IPE's publication and asks how
has the world of pensions and investment changed in that time? For better for worse? Or have things stayed much the same?

Have investment managers grown smarter after the first bear market that many of them have ever experienced? Have pension fund managers grown wiser about the drawbacks of relative returns?

Have investment consultants justified their fees? Have they led or followed developments in investment strategy? And what of actuaries? Did their estimates of life expectancy exacerbate the problem of longevity risk?

Financial supervisory authorities have played a key part in pension fund regulation over the past 10 years. But have they been too heavy-handed in their efforts to improve the solvency of pension funds? And how about governments? Have their attempts to reform their pension systems succeeded or failed?

We wanted pension fund managers, administrators and trustees
to look back and tell us whether their views of the significant
developments of this period square with ours.

For instance, it could be argued that most of the significant
investment developments of the past 10 years - for example the growth in the importance of hedge funds - were unexpected or unanticipated.

Certainly , the rate of growth has been phenomenal. The nominal value of outstanding credit derivatives in 1997 was about €140bn, Last year this had grown to €12 trillion. Hedge fund assets have grown from €80bn in 1997 to about €770bn today.

A large majority (85%) of the pension fund managers and administrators who responded to our survey agree that most investment developments were unexpected, although there is some qualification. For example, a Danish pension fund manager remarks that he would "prefer ‘many' to ‘most'".

In contrast, it could be argued that the major political events of the past 10 years, in particular the September 11 terrorist attack on the US, had far less impact on financial markets than was expected at the time. Again, there is substantial agreement (76%) with this view.

Investment managers and their behaviour over the past 10 years come in for some rough handling, however. We suggested, perhaps naively, that they might have learned the lesson of the bear market in equities that began in 1999-2000 - that markets cannot go up forever - and re-thought their investment strategies.

This suggestion elicits a collective snort of disbelief, with 68% of respondents disagreeing. Even those who agree feel that the phenomenon of chastened investment managers will be brief. "Memories are short," a Dutch pension fund manager observes. "Probably they have learned the lessons only temporarily," a UK pension fund manager adds.

Pension fund managers, on the other hand, have moved on. We suggested that the most significant development in the way pension funds have been managed over the past 10 years has been the growth of risk management. A large majority (88%) agree.

Even so, there are a few caveats. For example, a Dutch pension fund manager points out that "the focus has shifted more towards short-term risks and away from long-term risks like solidarity" and a UK pension fund manager suggests that "responding to new regulation has been at least as important as the growth of risk management".

Perhaps not surprisingly, pension fund managers have mixed feelings about the changing role of investment consultants over the past 10 years. A small majority (59%) agree that their importance has grown. The degree varies from country to country in Europe. In Spain, for example, one pension fund manager notes that their importance "has grown, but only very slowly".

There are also strong reservations about whether the growing importance of consultants is justified. "The quality of their advice is questionable," a Dutch pension fund manager observes.

A substantial minority feels that consultants have not become more important over the past decade. "Consultants continue to believe their own hype that only they know what is going on in the industry and must be arbiters of the way forward," one UK pension fund trustee says.

"They are becoming less important because investment managers have had the guts to come forward and tell trustees what they can do for them. Consultants have been far too selective over what information they were willing to share - for a fee of course."

Actuaries are handled far more gently, however. Their record has not been good. Yet actuaries say they were engulfed by the ‘perfect storm', when longevity, equities and gilts all went spectacularly the ‘wrong' way at more or less the same time. Nobody could have forecast that.

"Actuaries are no more responsible than the trustee who employed them and failed to quiz them
adequately. The relationship has now become far more professional all round which can only be for
the good of the member in the long term," a UK pension fund manager says.

Opinion is far more divided on the blameworthiness of financial supervisory authorities, who have imposed tougher regulations on pension funds in the aftermath of the ‘'perfect storm'. A slight majority (53%) agree with the suggestion that, in general, European financial supervisory authorities have done more harm than good in their attempts to regulate pension systems over the past 10 years.

Again the response depends largely on the country of the respondent. Pension fund managers in Spain, Portugal and Switzerland are happy with their supervisors' regulatory efforts. Managers in Holland and Denmark are uncertain, while managers in the UK, Belgium, Germany, Austria and Latvia are unhappy about the effects of new regulations.

One UK trustee takes a particularly Euro-sceptic view of pension fund regulators. "It is thanks to those morons in Brussels that we have had these ridiculous funding regulations that, far from adding security to members' benefits, have ensured the demise of the final salary scheme," he rages.

European governments come in for harsher criticism than their financial regulators in their attempts to reform their pension systems over the past 10 years. Nearly three quarters of respondents (73%) feel that generally they have not been successful.

On the upside, there is a feeling that people are more engaged with pensions. Most respondents (82%) agree that people in general have become more interested in workplace pensions over the past 10 years. Yet fear of default rather than optimism about the future may be behind this growing interest. "People are certainly more concerned about whether they will ever see their pension in payment," one fund manager observes.

There is also little confidence in the public's understanding of pensions. A majority (68%) think that public understanding of pension issues has not increased.

Two thirds of respondents (68%) believe that people are just as willing to put their money into a pension fund as they were 10 years ago. A third are doubtful. "Most people think along the lines that pensions are not to be trusted," one manager says. There is also a feeling that people are looking elsewhere to invest their savings. "Due to a combination of falling yields, lowering annuity rates and the feeling that if the ‘professionals' can get investment markets so badly wrong ‘amateur' investment may work just as well," one pension fund manager suggests.

And what of pension fund managers themselves? Has their role and status changed over the 10 years? Has the job of pension fund manager become more difficult and demanding? An overwhelming majority (94%) say that it has.

Well, they would do, wouldn't they?