IRELAND - Irish pension fund trustees have shunned alternatives as they do not trust the managers, according to participants at a recent Global Pensions Irish pensions roundtable.
Participants said trustees preferred to use firms they had strong local ties with.
Phelim O’Reilly, general manager of the Construction Federation Executive Pension Scheme, said Ireland had a trust based system and trustees were suspicious of investment instruments that lacked transparency.
He said: “It is the Irish personality, if we don’t know the person who is supplying the product, we’re not as comfortable as when we have some kind of relationship.”
Jerry Moriarty, director of policy of the Irish Association of Pension Funds (IAPF), said funds had a natural tendency to invest in property and equity in Ireland, which had worked well, but meant people were reluctant to change.
The aversion to alternatives was put down to track records by Sean Keogh, pensions communications executive at Aer Lingus.
He said: “We want to be shown how it’s done.”
However, Martin Condon, director of Hewitt Associates, blamed the relatively small size of many Irish pension funds, pointing out they could find it hard to access the products.
Paul Droop, senior investment consultant at Watson Wyatt agreed with Condon, he said: “You need scale, there are limitations to smaller schemes getting access, and for the larger schemes it means they’ve got to start thinking about doing things slightly differently.”
See the Global Pensions Ireland supplement in the November issue for the full transcript.
A buyout tool which provides schemes with up-to-date pricing and comparisons between insurers has been launched by JLT Employee Benefits.
The DB white paper sets out plans to review the funding regime, with 'prudent' and 'appropriate' possibly redefined. But James Phillips asks if this could this signal a return to an MFR-like approach?
The trustees of GKN's pension schemes have agreed a package of mitigation measures that would improve funding to a "more prudent level" if Melrose's offer is accepted by shareholders next week.
While the new powers are welcome, most respondents doubt it will make a difference to the outcomes for members, Pensions Buzz respondents say.