UK – A new report commissioned by the government’s pensions department says trustees are “highly dependent” on investment consultants.

And it says that consultants’ contracts tend not to be based on formal performance assessment.

“Investment consultants were involved in many different aspects of investment decision-making, and trustee boards were highly dependent on them in many cases,” the DWP said in a statement.

“Investment consultants’ contracts tended to be long-standing and based on trust rather than formal performance assessment.”

The findings come in a 100-page Department of Work and Pensions case study of how 14 occupational pension schemes have responded to the Myners Principles. The report, “The Myners Principles and occupational pension schemes”, is based on research carried out by Consensus Research International.

“In view of the many roles investment consultants play which differ across schemes, and the apparent dependence of trustees on them, questions about encouraging schemes to re-tender their contracts or placing more formal obligations on investment consultants when they act for trustee boards or support them in certain ways that have gained importance under the principles,” the report says.

Only a minority of schemes provided ongoing training for trustees, the DWP found. “Little evidence was found that training would increase further on a voluntary basis, because trustees generally spend too little time on investment matters to justify it.”

It said that progress towards compliance with the Myners Principles had been most visible in terms of investment decision-making areas such as asset allocation, benchmarks and performance measurement.

“Evidence of progress was visible to a lesser degree on developing clear objectives and explicit mandates for investment managers.”

But there was less progress in other areas. “Trustee boards had been less progress towards effective decision-making, shareholder activism, socially responsible investment, transparency, assessing their own performance, and timescales for assessing the performance of investment managers.”

The DWP says the case studies have paved the way for a later qualitative survey.

Meanwhile, the Pensions Policy Institute has put out a report saying that most people in the UK are “under-pensioned” – and that recent reforms to the pension system will not solve the problem.

“The structure of the UK pension system means that any group with low earnings or an irregular employment record will lose out in retirement,” said the report’s author Chris Curry.