IRELAND - Irish pension schemes have cast doubt over the ability of pan-European pensions to make a real impact, despite the implementation of the IORPs directive in 2005.
This was one of the preliminary findings of the Irish Association of Pension Funds’ (IAPF) 2006 survey of investment trends among pension schemes with combined assets of over e15bn, exclusively revealed this month by Global Pensions.
According to the IAPF, survey respondents ex-pressed mixed views on the benefits of such arrangements. “Although there appears to be some movement towards pooling of assets on a pan-European basis, it is very difficult to amalgamate liabilities cross-border,” said Fiona Daly, member of the IAPF’s investment sub-committee, when analysing the results.
In addition, the survey revealed an increase in demand from trustees for their investment managers to actively engage with the companies in which they are shareholders, for example, by exercising their right to vote. However, very few pension schemes impose SRI restrictions on their investment managers, believing this is beyond the scope of their mandate as trustees, the IAPF found.
The results indicate that liability driven investment (LDI) may be more attractive to schemes in coming years, as funding positions are expected to improve considerably. The IAPF cautioned that careful consideration should be given to the design of any default strategy by companies offering defined contribution (DC) schemes. This was in light of the finding that the vast majority of DC members invest in the default option, which is usually either a consensus fund or an active balanced fund.
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