UK - Radical changes in the way pension schemes and fund managers conduct business are needed to ensure assets outstrip liabilities, State Street Global Advisors claims.
Under chief investment officer Alan Brown's best practice model, schemes would set up customised benchmarks that match their liabilities. Managers would then be hired on the basis of beating that liability benchmark.
Fees would depend partly on their performance, with higher pay being awarded on the basis of how much the surplus grew.
Brown believes that the current set-up does not meet pension fund’s real goals.
As an example, he said that while it was clearly better for equity managers to beat their benchmarks rather than under perform, it may be inadequate if that happens when equities are falling and bonds rising.
He said: “The alignment of the pension fund’s and investment manager’s goals are far from perfect.
Generally, the manager gets paid more if the value of the assets go up, whether or not the manager outperformed or tracked well, and whether or not the assets went up by more than the liabilities.”
By Geoffrey Ho
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.