Recommendations in the Myners report may turn out to be "stepping stones on the path to compulsory asset allocation in the UK", according to UK consulting actuaries Lane Clark & Peacock (LCP).
In its formal response to the Treasury LCP fears that the way in which Myners’ principles for the reform of UK institutional investment is measured might lead to government legislation and the stifling of a broader investment strategy.
Investment partner at LCP Paul Haines said: “There will be no problem if ‘principles’ set out in the Myners’ report remain just that - principles. But our worry is the way the Treasury measures the efficacy of each principle by the resulting in trustees’ decisions, the stick of legislation may be brought to bear on trustees even if they have followed Myners’ principles to the letter.”
He added: “Pension funds may, for example, consider private equity investment but ultimately decide that this asset class is not appropriate for their scheme. If the Treasury sets a two year target for the level of institutional investment in private equity which is not met, the government might decide to legislate and force trustees into meeting this target. This could be disastrous for the long term health of individual pension schemes.”
By Madhu Kalia
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.