Trustee training was found to have increased at 63 per cent of UK schemes, up from 48 per cent of schemes a year ago.

Less progress appears to have been made on Myners’s suggestion that pensions funds measure the advice of their investment consultants. The survey found that 62 per cent of funds still have no way of measuring consultants’ recommendations.

On the plus side, this is a 23 per cent decrease from last year. In addition, the vast majority of pension funds are aware of the need to measure consultants, even if they are not yet doing it, according to Julia Streets, head of corporate communications at
Instinet.

Many schemes use informal methods. A member of staff at a £1bn (e1.45bn) public sector fund quoted in the survey explained: “At the moment we apply a qualitative review. There are no formal benchmarks but trustees have an annual discussion on advisers.

“I proposed a qualitative tool for the evaluation, but it was deemed too complicated. The trustee board decided that, given time and skill constraints, they preferred a qualitative evaluation system.”

Transaction costs, another of Myners’s bugbears, appear to be coming under more scrutiny than ever before. Ms Streets said that 10 per cent of pension funds are now separating transaction costs from their fund manager’s fees.

Soft commissions are also under the spotlight, with the number of funds that permit their managers to use them down by 10 per cent on last year, to less than half.

Commission sharing arrangements are being increasingly viewed as a means of improving transparency in the use of commissions to purchase investment research.

Instinet found that currently, 26 per cent of pension funds allow their fund managers to enter into commission sharing agreements. The percentage tended to comprise the larger funds.

Ms Streets put forward Instinet’s business model as a possible solution to the growing desire for transparency in execution.

RM

Printer friendly version