Pension fund trustees in the UK must spend more time on investment matters if problems such as underfunding are to be challenged, consultants say.
Almost 80% of UK pension fund trustees spend less than 20 hours per quarter on investment-related matters while a quarter of them are only able to dedicate five hours or fewer per quarter to investment matters, research has found.
Zuhair Mohammed, chief executive of delegated consulting services at Aon Hewitt in the UK, the advisory firm that carried out the research, said: "Highlighting the results of our research is not intended as a criticism - but a reality check is needed if assets are to be put to work more effectively. Continued economic uncertainty and highly volatile financial markets are stretching the already limited resources of most trustee boards to the extreme.”
Mohammed added that managing market volatility will be a key theme for the foreseeable future, and this requires investment skill and conviction.
“What is clear from our survey is that the time devoted to investment matters and the level of investment expertise permanently on trustee boards is simply falling short of what is required."
Other findings in the research included that almost three-quarters of respondents said that the percentage of investment experts sitting on trustee boards is 25% or less – even though they were expecting to carry out major investment reviews in 2011.
The survey also revealed that nearly 50% of participants feel that trustees typically make decisions too slowly. Nearly three-quarters of the survey sample stated that trustee knowledge and the speed of decision making capability were the two factors driving demand for delegated investment solutions.
The survey of 307 pension trustees, pension managers and others was conducted in May 2010.
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