Spain’s expanding pensions marketplace may not provide as many opportunities to foreign fund managers as initially thought says Cerulli Associates, Boston-based strategic research and consulting firm.
By the end of 2002 company pension plans should be able to outsource mandates to more than one manager. Under current legislation, a Spanish corporate pension system must place all assets with a single domestic asset management company. It has therefore been expected that a significant proportion of funds will come available to foreign specialists.
Analysts at Cerulli, however, debate just how much international exposure company pension plans will demand. Many large company pensions plans are overseen by so-called ‘commissions of control’ which have high employee representation and tend to opt for conservative asset allocations.
Furthermore, Spain’s company pension plans account for less than half of the overall retirement fund industry’s assets under management. The remainder resides in third-pillar pension vehicles sold to individuals, the distributors of which are reluctant to outsource.
Thirdly, says Cerulli, Spain’s retirement fund marketplace is highly concentrated, with the four largest plans comprising almost half the corporate marketplace. The number of actual pensions clients will, therefore, be small. Some of the largest plans will also not necessarily yield large mandates – 90% of Telefonica’s plan is indexed.