Pension fund executives are questioning their management processes and the level of accountability available through the traditional investment consulting model, says SEI's Global Quick Poll of pension executives in the UK.

The poll, which also questioned participants in the US and Canada, suggests that ongoing market volatility has led to questions about the model's viability, and 58 per cent of UK respondents agreed that this increasing risk has forced trustees to question the model's accountability for results. A quarter of the UK participants said they had to proactively ask their consultant for advice during turbulent market conditions.

Executives also admitted that they remain under pressure, with more than a third of UK participants who use a consultant believing that, as a trustee body, they have insufficient resources to perform necessary due diligence of investment managers moving forward. Seventy-five per cent of answers showed that executives feel that their pension fund has increased interest in risk management, and a goals-based approach to pension fund management. Scrutiny from a company sponsor affected the overall finances of 75 per cent of UK respondents, and sponsor covenant risk was identified as the most significant risk to the pension fund by 29 per cent. Equity market risk (25 per cent) and mortality risk (21 per cent) were other identified factors.

"Pension scheme decision makers continue to struggle to balance all the tasks required as a trustee body," explained Patrick Disney, managing director of SEI's institutional group in EMEA. "As the poll reveals more than half of their pension-related time is spent on either administrative activities or the monitoring of investment managers, time which could be spent concentrating on strategic issues."

Disney voiced his support for a Fiduciary Management approach as a solution to issues of trustee time and focus: "It brings benefits in the form of nimble decision-making, strategic advice, and constant manager oversight, helping to achieve the scheme's long-term funding goals."

When questioned on alternative investments, UK executives are looking towards property (46 per cent), hedge funds (43 per cent) and a third view timber or energy as viable options.
"This trend is likely to be a direct result of the credit crunch, as pension funds seek new ways of achieving returns outside of traditional equities," Disney concluded.

The poll summary is available by email
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