More than two-thirds of respondents to a new survey of occupational pension funds in the UK say that investment consultants should not offer asset management services.
Asked whether consulting firms should also provide asset management such as manager-of-managers as part of the same corporate entity, 67% of respondents said consultants should offer consultancy only. They said firms should not be associated with the provision of any asset management services.
They were responding to the Pension Fund Partnership’s sixth annual survey of occupational pension schemes. The report is based on the findings from responses by 242 schemes, representing almost £123bn (e184bn) in assets and around 2.9m members.
“This year's findings on this point confirm those seen in last year's research and would seem to imply that consultants are not necessarily winning the debate over providing asset management as well as consultancy,” says Kevin Sims, managing director of the Pension Fund Partnership.
“It is an important debate to have and both sides have good points to put across, but it appears from this study that we are not very much further on than a year ago.
“One clear message from the survey respondents is that when it comes to what consultants could do better, quicker responses and more timely information would certainly be valued by schemes.”
The survey found that nearly 40% defined benefit (DB) respondents have closed their DB schemes to new members – compared to 14% in 2001.And the company contribution rate to DB schemes is now 15.63%, a 28% increase on the 2001 average contribution rate of 12.17%.
Almost 20% said they were very satisfied with the investment performance achieved by their manager over the last year, against 10% in 2003.
Thirty-two percent of respondents felt the main challenge facing occupational pension schemes today is funding. Asked what one thing in the industry the respondents would change, if they were able, a third said simplify/reduce legislation and regulation.
n Separately, Mercer Human Resource Consulting says companies’ making one-off payments to plug pension scheme deficits should benefit from better industrial relations.
“By making one-off payments to their pension scheme and placing debt with investors - who are more able to bear and diversify the risk than pension scheme members - employers should benefit from increased staff motivation and retention,” said partner Paul Greenwood.