The number of UK pension funds more than £1bn (€1.3bn) in size with fiduciary mandates has more than doubled over the last year, according to Aon Hewitt.

The consultancy said its sixth annual fiduciary management survey found just over half of funds with more than £1bn in assets were using either full or partially delegated fiduciary mandates.

Responses from 230 funds with assets under management of £181bn also found that those not using fiduciary managers still remained concerned about the costs, as well as the schemes’ ability to differentiate among providers.

The consultant’s previous survey from 2014 – which saw responses from schemes worth £269bn, but, at £40bn, captured £20bn less in fiduciary mandates reported this year – only saw 37% of respondents use fiduciary mandates, a figure that increased to 46% for 2015.

Aon Hewitt’s survey captures a large part of the fiduciary management universe, with KPMG last year reporting fiduciary mandates worth £72bn, split almost equally between partial and full fiduciary mandates.

Among large schemes, capturing funds with assets of more than £1bn, the figure rose to 51%, up from 22% in the 2014 survey.

Sion Cole, head of European distribution at Aon Hewitt, said there was a “common misconception” fiduciary mandates in the UK were used mainly by smaller schemes.

“Last year, 22% of larger schemes used fiduciary management services, and this year’s results show a significant uptake, proving schemes are recognising the benefits of delegating the day-to-day decisions on the portfolio, and the fact they see value in the wider range of bespoke solutions available,” he said. 

Cole also said defined benefit (DB) funds were now becoming legacy schemes and that this was a driver in the uptake of fiduciary mandates.

“There is now an end point in mind,” he told IPE, noting that there was often a focus on ensuring the legacy funds were managed in the most efficient way, guaranteeing they could fulfil benefit promises – likely in a shift towards a glidepath strategy for the DB funds in question.

He also rejected that there is a direct problem with investment consultants and actuaries already working with funds taking on additional responsibility as fiduciary managers.

Cole said a fiduciary mandate relied on a long-term relationship, requiring a company trusted by pension trustees.

“If you think from the investment consulting universe, aspects you’re buying from fiduciary management are those skills that exist in the investment consultant industry – for example, asset allocation decisions, decisions around liability [management], plan design and implementation,” he said.