EUROPE - The number of pension funds retendering investment consultant services fell sharply in 2010 following three years of steady increases, a new survey reveals.

According to consultancy IC Select, the number of funds retendering their investment consultant services fell from 5.2% in 2009 to 3.5% last year.

The survey - based on information from more than 2,300 pension funds - also found that 1.9% of pension funds changed their investment consultant in 2010, from 3.5% in the previous year. 

Roger Brown, founder and director of IC Select, said: "The results are surprising.  Following the market turmoil of 2008, we would have expected that trustees would have deferred the review of their investment consultant until calmer times. 

"This would have resulted in an increase in the level of retenders in more recent years."

The Morris Review of the actuarial profession recommended that pension funds retender their actuarial services every six years. 

This would suggest that 16% of pension funds would retender their services each year if the industry aimed to meet this governance recommendation.

The current level of 3.5% is significantly below this level, IC Select said.

"However," Brown added, "we do not believe the level of retendering should increase to the 16% implied by the Morris Review. 

"Pension schemes benefit from long-term relationships with their investment consultant. 

"Consequently, trustees should aim to enhance their governance by improving their ongoing assessment of their investment consultant to get the most from the relationship, rather than relying on market testing of their services to demonstrate good governance."