Administration September 3, 2004

PwC Finds Holes in UK Pension Myners Compliance

March 9, 2004 (PLANSPONSOR.com) - Less than half of pension fund trustees in the United Kingdom (UK) have assessed the performance of their investment advisers and even few have governance objectives.
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Sixty-five percent of 66 major pension fund trustees canvassed by PricewaterhouseCoopers did not have a corporate governance policy and only 46% assessed the performance of their investment advisers.   Furthermore, 85% of trustee boards did not have individual governance objectives.   This is despite recommendations made by former Gartmore chairman Paul Myners in 2001’s Myners report.

“Overall, trustees have taken steps, post Myners, to make significant changes to the management and control of their schemes to implement improvements in governance,” report author Andrew Evans said in his analysis of the findings.   “However, there are some key Myners recommendations that have not been fully implemented.”

PricewaterhouseCoopers’ study follows UK government officials’ request to Myners in 2000 to investigate the way in which investment decisions are made within the UK institutional investment industry. He was also asked to identify factors that might be distorting the decision-making process to the detriment of both pension funds and their beneficiaries.   After carefully deliberation, Myners produced a report outlining key principals investment advisors should follow to effect proper investment decisions.  Myners’ principles as outlined in his report are:

  • effective decision-making
  • clear objectives
  • focus on asset allocation
  • expert advice
  • explicit mandates
  • activism
  • appropriate benchmarks
  • performance measurement
  • transparency
  • regular reporting.

In 2004 though, PricewaterhouseCoopers has found pension fund trustee are coming up short, and that further changes need to be made to the operation of their fund in order to improve governance and meet the standards required by the Myners report.   Specifically, the report points to three key areas “where trustees can deliver tangible improvements to governance:”

  • developing and agreeing on a governance policy for the scheme.
  • assessing the skills and knowledge of the trustees individually and collectively and taking steps to close any gaps.
  • developing principles for recognizing and addressing conflicts of interest.

A more detailed copy ofPricewaterhouseCoopers’ Survey of UK Scheme Governance Results can be found at  www.pwc.com/uk .

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