UK – Trustees of occupational pension schemes in the UK are finding “barriers” to challenging their relationships with investment consultants, says a new government report on the uptake of the Myners Principles.
“Across schemes of all sizes, there appear to be barriers to challenging relationships with investment consultants,” said a Department of Work and Pensions research report.
It said: “Leadership of pension schemes' responses to the Myners Principles most often lay outside the board of trustees, with investment consultants frequently taking the lead.”
The report said that “pension schemes rarely challenge the views of their investment consultants” and added that only 15% of schemes had overruled a consultant’s recommendation during the review period.
The DWP research found that 80% of schemes employ investment consultants, but that 53% use just eight organisations. The research found that trustees on average spend less than four hours a year on investment matters – out of a total of 10.6 hours in board meetings.
Only 25% of schemes said their trustees took part in formal training programmes.
“Asset allocation has typically taken the form of predictable responses to changing markets, rather than adoption of the more fundamental changes recommended by Myners,” the DWP added.
Consulting firm Watson Wyatt disagreed. Nick Watts, its head of European investment consulting, said there has been "significant change in the frequency of investment strategy reviews incorporating risk budgeting techniques to complement more established processes”.
And Watson disagreed with the view that pension schemes rarely review the appointment of their investment consultants – saying it was involved in 225 pitches last year and 125 pitches so far this year.
“The survey provides a comprehensive picture of current practices; examines the extent of voluntary changes since March 2001 and whether the Principles have been successful in bringing about change; and examines difficulties pension schemes experienced in adopting the Myners Principles,” the DWP said.
The DWP’s findings come from a telephone survey carried out by Consensus Research of 1,580 trustees - covering more than half of occupational scheme membership.