HSBC Actuaries and Consultants Limited has launched a new investment advisory service called Profile Plus to manage day-to-day pension scheme investment strategies on behalf of trustees.
Falling share prices have been largely responsible for pension fund values declining by over 30 per cent in the last three years, according to HSBC’s IMAGE survey of pooled pension funds.
HSBC argues that this plunge in market values, allied to increasing demands on time, the complexity of current investment issues, and the higher standards of care, attention and expertise demanded by the ‘Myners Principles’ are making trusteeship increasingly onerous -potentially exposing trustees to criticism about the quality of investment decisions.
The key decision for most pension scheme trustees relates to investment strategy and the relationship between equities and bonds, says HSBC. This has the greatest impact on the financial health of schemes as the poor returns over the last three years highlight,” say the bank’s consultancy arm. “Schemes that invested too much money in equities have suffered. A 10 million fund over-weighted to equities by 20 per cent will have lost 650,000 in value.”
David Clare, Head of HSBC’s Investment Consultancy team, said: “All too often the effective management of a pension scheme seems to focus on selecting the right combination of investment managers. However, it is more important to get the strategy right and make sure it stays right. The level of responsibility placed on trustees is immense and they are hard pushed to find the seven-10 days a year necessary to meet, review, discuss, and monitor investment strategy.”
HSBC’s Profile Plus aims to ensure that trustees are acting to the highest standards of care on investment issues; determine an appropriate investment structure considering all possible options; and relieve trustees of the burden of time required to discharge this aspect of their responsibilities.
HSBC says that because its investment consultancy team is not tied to any single investment manager or management institution, they are able to draw on a database of over 100 thoroughly researched investment organisations to tailor a solution to each client’s unique combination of risk attitudes, performance objectives, time constraints and solvency issues.
HSBC Actuaries and Consultants Limited’s IMAGE survey provides performance statistics using capital growth and contribution payments on a monthly basis for 40 discretionary balanced pooled pension funds and five consensus funds.