ITALY - Italian pension funds are in need of an organisational overhaul to keep up with the evolution of fund management practices, a study by Mefop, the Italian society for the development of the pension fund market, has concluded.
"The survey shows not only are asset managers asking for the adoption of other performance measurement tools, complementary to the traditional benchmark-based ones, but pension funds themselves are also open to innovations."
The survey, which interviewed both asset managers and pension funds, also found sharp disagreement over management fees.
More than 90% of managers claimed management fees currently charged to Italian pension funds were lower than those charged to other institutional investors, while over 60% of pension funds believed they were the same or higher.
Ballanti commented: "I believe this is a heritage of the past, when, in order to gain market share, managers offered very advantageous deals to pension funds. There is room to revisit current fees and to introduce performance related commissions."
However, Andrea Canavesio, partner at MangustaRisk consultancy, commented: "There is never a reason to pay asset managers too much. I think performance-linked fees are certainly to be considered, but there are various other options."
On the regulatory front, Ballanti concluded potential future changes to the law limiting the types of asset classes eligible for pension fund investment would also push the sector forward.
But, he warned: "Currently, one could question whether the knowledge of pension funds on asset classes such as hedge funds is sufficient to make sound investment decisions."
Adding to this, Monica Basso, head of institutional sales, Pioneer Investment Management, commented: "The update of Decree n. 703/96 about pension fund investment will be released - in the opinion of the Authorities - quite soon.
"The new law has been delayed due to the government change and the market crisis we are currently facing makes the new rules very urgent, in order to exploit investment opportunities that better fit pension funds' needs."
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Caroline Rookes CBE and Michele Hirons-Wood have joined The Pension Superfund's board of trustees to focus on maintaining governance standards and safeguarding member benefits.
The first specialist independent firm advising pension schemes on bulk annuities or moving to a consolidator has been set up with ambitions to shake up the market.