An SEI Global Quick Poll released shows that an overwhelming majority of global pension schemes are re-evaluating their investment management, whilst over half of the UK schemes surveyed would consider outsourcing to a Fiduciary Manager.
In the wake of poor performance and increased funding gaps, nearly two-thirds (64%) of the global poll participants (UK 71%) made asset allocation policy changes in the past year and nearly half (Global 48%) (UK 50%) said they are moving assets out of equities. In addition to asset allocation changes, UK pension funds are also considering changes to the way their scheme is managed with well over half (61.3%) stating that outsourcing to a Fiduciary Manager would be something they would consider.
“The impact of last year’s market volatility has once again put pensions at the top of the agenda of many companies,” says Patrick Disney, managing director of SEI’s Institutional Group in EMEA. “Funding deficiencies are being felt across the board and pension funds and company sponsors are keen to explore new ways of managing the pension scheme that can improve governance and risk management through better decision making. The interest in Fiduciary Management in this survey is a clear reflection of the recognition by pension schemes that outsourcing both advice and implementation to one provider could be a viable and more effective alternative to the traditional model.”
The UK poll results reveal some of the potential flaws in the traditional model of pension fund management particularly in relation to oversight with 87% of UK respondents stating that trustees have not met more than twice and 19.4 percent stating they had not met once outside of their quarterly meeting schedule over the last 12 months despite the volatile conditions. The results also show that over 71% of UK pension schemes experienced a drop in assets of at least 10% whilst three quarters (75%) have experienced a drop in funding levels. Interestingly despite negative corporate news in the UK only 33% of those surveyed in the UK are concerned about the ability of their sponsor to make contributions perhaps reflecting a lack of understanding of the corporate covenant’s effect on investment strategy.
The global poll, conducted by SEI’s Pension Management Research Panel, was completed by 157 pension executives who oversee pensions ranging from 20 million to more than 3 billion in assets. Participants were from five countries – Canada, Hong Kong, Netherlands, United Kingdom and United States. None of the participants were institutional clients of SEI.
D.C.