UK - Pension funds in the UK are relying more on consultants but have little or no idea how to measure their advice, a new survey has found.

"Following the trend of the 2003 survey, pension funds continue to increase their reliance on consultants," the survey found. "There has been an increase in the amount of external advice received by funds and a decrease in the number of trustees that have started to react differently than before Myners to the advice."

Forty-five percent of funds polled by broking firm Instinet with a market value over one billion pounds (1.47 billion euros) saw an increase in advice received from investment consultants - a 10% increase from 2003.

But the report found that "pension funds struggle to find accurate methods of measuring the advice they receive from consultants because of a lack of a common industry consensus and approach".

Sixty-two percent of funds have no formal way of measuring the quality of advice they receive from consultants.

The report said:" Although we have seen an increase in the number of forms that are attempting to measure the performance of their consultants, we have found that the majority still either choose not to or have no idea how to go about doing so."

"Without any standard of measurement there is no way for the fund to know whether the advice they are receiving is worth the fees and by implication represent best value for their members."

It also found that funds were increasingly negotiating separate actuarial and investment consulting contracts. Forty-four percent had separate contracts, up from 29% last year.

The survey also found that 59% of respondents were happy with the idea of having direct access to asset managers.

"The advantages of a pension fund having direct access to investment managers is that they would be less dependent on investment consultants, they would have a wider variety of fund mangers to choose from and transparency in decision-making would be improved."

The survey is called 'Taking the temperature of the UK pension fund industry' and was conducted by Richard Davies Investor Relations, which interviewed 101 UK pension funds, representing 312 billion pounds in assets under management.