GLOBAL - People and process are without doubt more important to pension funds than past performance, confirmed the results of October's Global Pensions 100 Panel.
Every single one of the pension fund respondents to the survey chose people and process as more important than past performance when giving a mandate to a new asset manager.
The results support the findings of UK research released in September by Fidelity, which found that local authority pension funds considered performance less important than people when it came to choosing managers.
Consultants have also agreed with the findings.
Scott Vincent, head of global fixed income research at Russell, said: “Past performance is useful to gauge what a manager should produce, but short term historical evidence is of very little use when looking into long term returns.”
Meanwhile, Craig Baker, global head of manager research at Watson Wyatt, said that unfortunately in the past there had been a tendency to choose managers based on past growth and not prospective returns, but hopefully this would change over time.
Baker stressed: “While it may well be a tired cliché, we strongly believe that past performance alone is a very poor guide to future performance. This is why we focus on the ‘people’ aspect when doing manager research and it is good to see this survey supports this.”
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.