Pension funds fret over investment and regulation
01 May 2013 London
Image: Shutterstock
There will be no let-up in the challenges facing funds, said respondents to a State Street survey.
A majority (81 percent) of responses from defined benefit and defined contribution pension schemes in Germany, Italy, Netherlands, the Nordics, Switzerland and the UK also predicted that investment decisions will become more complex in the coming years.
Seventy-five percent of respondents predicted that persistent funding challenges will accelerate the closure of defined benefit schemes and the transition to defined contribution vehicles, and 69 percent of the respondents said that national governments will take aggressive action in an attempt to close the retirement savings gap.
“These expectations and challenges will occur alongside strong regulation, explaining why 76 percent of pension schemes surveyed believe that smaller funds will look to outsource all aspects of fund management over the next five years,” said State Street.
The research also found that since the financial crisis, one in three European pension schemes claims it is either "extremely difficult" or "difficult" to keep up with new regulatory developments in the pensions industry.
A further 46 percent find it "slightly difficult" to do this, with only one in five (21 percent) claiming it is not difficult at all. A further indication of the regulatory pressure pension funds feel under is that only 21 percent of those interviewed said that demands from regulators and ratings agencies were not a challenge. Some 31 percent said they were a "significant challenge".
Sven Kasper, responsible for regulatory, industry and government affairs for State Street in Europe Middle East and Africa, said: “Since the financial crisis, there have been substantial changes in the pensions industry in terms of regulation, transparency and reporting, and this has coincided with very volatile markets."
"Our research findings show that pension funds are under more pressure than ever before as they struggle to keep up with the ever changing landscape. ”
A majority (81 percent) of responses from defined benefit and defined contribution pension schemes in Germany, Italy, Netherlands, the Nordics, Switzerland and the UK also predicted that investment decisions will become more complex in the coming years.
Seventy-five percent of respondents predicted that persistent funding challenges will accelerate the closure of defined benefit schemes and the transition to defined contribution vehicles, and 69 percent of the respondents said that national governments will take aggressive action in an attempt to close the retirement savings gap.
“These expectations and challenges will occur alongside strong regulation, explaining why 76 percent of pension schemes surveyed believe that smaller funds will look to outsource all aspects of fund management over the next five years,” said State Street.
The research also found that since the financial crisis, one in three European pension schemes claims it is either "extremely difficult" or "difficult" to keep up with new regulatory developments in the pensions industry.
A further 46 percent find it "slightly difficult" to do this, with only one in five (21 percent) claiming it is not difficult at all. A further indication of the regulatory pressure pension funds feel under is that only 21 percent of those interviewed said that demands from regulators and ratings agencies were not a challenge. Some 31 percent said they were a "significant challenge".
Sven Kasper, responsible for regulatory, industry and government affairs for State Street in Europe Middle East and Africa, said: “Since the financial crisis, there have been substantial changes in the pensions industry in terms of regulation, transparency and reporting, and this has coincided with very volatile markets."
"Our research findings show that pension funds are under more pressure than ever before as they struggle to keep up with the ever changing landscape. ”
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