GLOBAL - Pension funds could come increasingly under pressure to meet private equity fund call-up obligations in the medium to long term, a report a Preqin reveals.
It quoted a European investor saying "all limited partners should be worrying about meeting fund call-up obligations" in the longer term.
Despite this, Preqin said 92% of investors surveyed did not anticipate being unable to fund capital calls in the next 12 months, 6% said they might and 2% said they were unsure.
The report also said there were cases of pension funds becoming overweighted towards private equity due to the decline of public market valuations.
The California Public Employees' Retirement System (CalPERS) currently has 13.3% of its total assets allocated to private equity, while its target allocation to the asset class is 10%.
The survey found 21% of investors have already exceeded their optimum level of exposure.
It said many investors took actions to alter their short term plans for investing in private equity because they unexpectedly found themselves closer to their targets - although a majority of them (79%) said they had not exceeded their target allocations to the asset class.
In alternative, some investors widened acceptable private equity allocation ranges to overcome to rebalancing issue.
The California State Teachers Retirement System (CalSTRS) opted to widen the its investment range from 4%-11% to 3%-15%, when it found itself overallocated to private equity with 14.4% of its portfolio invested in the asset class.
In terms of future commitments to the asset class, 40% of respondents said their plans had changed and 56% said they would continue to invest in the asset class as normal.
Of those, 35% will be making fewer investments in 2009 than they had in recent years, 17% have opted not to make any further commitments to private equity and 17% will be more cautious than before.
Sir Philip Green's restructuring proposals for his retail giant Arcadia will not "adequately protect" its pension schemes' members, The Pensions Regulator (TPR) has said.
The Marks and Spencer Pension Scheme has completed buy-in deals worth £1.4bn with two insurers, mirroring similar transactions last year.
There have now been a total of 47 buy-in and buyout deals of over £500m announced since 2007. The full list, provided courtesy of LCP, is as follows...