Investing November 8, 2001

UK Pensions Undergoing Rapid Change: Greenwich Study

November 8, 2001 (PLANSPONSOR.com) - The UK pension market continues undergoing dramatic changes as companies increasingly start defined contribution plans, move money out of domestic equities and hire specialty managers.
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In fact, Greenwich Associates researchers said in releasing a study of the UK pension business, British pensions are changing more rapidly than any other world market in 30 years.

Major Greenwich study findings include:

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  • Among large UK companies, 39% provide defined contribution plans up from 24% in 1998. A further 17% say they plan to add DC plans in the near future.
  • 75% of UK plans were using specialty money managers as of June, nearly double that of three years ago.

“This shift is not just taking place at giant corporate funds, but also at smaller funds and local authorities,” said Greenwich consultant John Webster said. Among funds with assets under £500 million, usage rose from 35% in 1998 to 70%. At local funds, the jump was from 35% to 67%.

  • UK plans are upping allocations to international equities and bonds; 33% of total assets were in domestic equity in June, compared to 40% in 1998. Only 6% of UK plans expect their passive domestic equity allocation to be up in three years, and 39% expect it to be down.
  • More UK plans are likely to adopt customized performance benchmarks.

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