UK - Schemes and fund managers have made progress on implementing the Myners principles, delegates at a recent conference heard.
But managing director of the Treasury’s finance, regulation and industry directorate, James Sassoon, believes more needs to be done – especially by smaller schemes.
Sassoon – a last-minute replacement for financial secretary to the Treasury Ruth Kelly MP – said larger schemes were far more receptive to recommendations in the report on investment principles by former Gartmore chief Paul Myners than their smaller counterparts.
He said: “Paul Myners found a striking mismatch between the day-to-day, quarter-to-quarter world of fund management in practice – and the long investment horizons of most of their pension fund customers. Early indications from our review suggest this is still the case.”
He added: “We want to see pension funds providing fund managers with more clarity about the period over which their performance will be judged, and agreements that managers will not lose their mandate during that period for reasons of underperformance alone.”
Sassoon welcomed the increased levels of shareholder activism – seen as “crucial” for creating long-term value – and said measures in the Pensions Bill would enhance the expertise of trustees on investment issues.
But he told delegates that pension schemes – even the largest ones – seemed to find their relationship with investment consultants the “most awkward to challenge”.
Sassoon said: “The pensions industry needs to consider the ways in which it can clarify the respective roles of trustees and investment consultants. It also needs to encourage schemes to devote a greater proportion of their resources to making sound asset allocation decisions.”
He added: “The restoration of confidence in final salary schemes needs more than the backstop of the Pensions Protection Fund. But employers are beginning to see the competitive advantage of offering DB and, with an increase in workplace education, we are confident there is a solid future for final salary schemes.”
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