Around 24 per cent of UK pension schemes now delegate the implementation of investment decisions to a third party, a 17 per cent increase since 2011, according to the 2012 Aon Hewitt Delegated Investment Survey released today. It said a lack of investment expertise has driven trustees to improve pension scheme governance and speed of decision-making.

The survey revealed a delegated approach to investment is a key change made by trustees, as an additional 10 per cent surveyed said they intend to appoint a fiduciary manager or delegate investment issues. These results suggest delegated investment is set to grow rather than be a temporary trend.

The results, from the June survey of 329 pension trustees, managers and investment sub-committees among others, also showed two tiers of DB schemes may be developing as many remain limited in their ability to respond to fast-moving markets, and the differences between large and small scheme governance are growing bigger.

Almost three-quarters of respondents said just one in four trustees are investment experts, unchanged since the 2011 survey, and two-thirds of respondents said trustee boards spent five hours or fewer each quarter on investment decisions. Small scheme respondents indicated they spent less time on investment matters than large schemes.

Aon Hewitt partner Sion Cole said: “It is clear from our findings the majority of trustees are acutely aware of their limitations when it comes to making investment decisions, particularly as a result of the current challenging economic climate.

“We are seeing the increasing use of investment committees, independent trustees and delegated investment. However, there is a danger that trustee boards which do not address these issues will be missing crucial opportunities.”

He added: “Trustees, particularly of smaller, resource-constrained pension schemes, need to review their approach continually to ensure that their scheme is in the best possible position.”

Cole said flight plans are increasingly important as over half of UK schemes now have a systematic plan to deal with changing risk levels in light of changing market conditions. A further third plan to explore flight plans, a substantial increase from last year.

He said: “For flight plans to add the most value, there needs to be regular monitoring of risk and increased agility in execution. Delegating investment decisions provides this and allows trustees to focus their time more effectively.”

The survey also found that diversification in asset allocation remained static. Almost half of schemes still focus on traditional asset classes – equities, fixed income and real estate - and invest in three or fewer of these. Large schemes are more diversified with four-fifths of schemes with £1bn or more assets invested in at least four asset classes.

Delegated investment involves trustees assigning day-to-day investment decisions and implementation to a delegated provider. This is usually a consultant or fund manager, which operates within clear parameters, set by the trustees, and aims to meet trustees’ long-term investment objectives.

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