Providers who have demonstrated that they provide their clients with service above and beyond that of their peers are celebrated here in the PM Provider Awards 2004

Andrew Cheeseman asks Steve Delo key questions about the manager of managers approach, its effectiveness and the benefits that different sizes of schemes can derive from the service

As final salary schemes search for solutions to their funding problems defined contribution schemes are looking to ascertain their applicability but, says Ian Richards, they may not survive translation to DC schemes

Pension funds that have to keep pace with the salary inflation of active members are increasingly looking to boost returns by targeting alpha – or manager outperformance – from their assets, says Gitu Panjabi

Although predicting the future where markets are concerned is never an exact science there are pointers to the route that the third-party administration market is taking. Stuart Heatley looks at the likely outcome

A pension fund’s decision to move from equities to bonds is simply the first step in a process that must ensure that the fundamental decision to invest is not negated by other overlooked factors, says Craig Hurt

Trends abound in every industry, but whereas the 1970s flares in the back of the wardrobe cost you nothing more than a little self-esteem, remaining in the wrong investment style too long can cost a lot more, says George Muzinich

Nobody ever said that the stock market was rational or even logical. But when the actions of investors are analysed against Freud's three-pronged model, it becomes apparent just how odd it is, says Jeff Saunders

With businesses under increasing pressure to manage their pension liabilities by enhancing cost control and risk management, it is no surprise, says Robert Birmingham, that the spotlight has fallen on the actuarial profession

Escher UK is a leading manager of managers provider with a successful track record of providing innovative investment solutions for pension scheme trustees. Its award-winning manager of managers investment service is known as TEAMS (The Escher Asset Management Service) which provides access to specialist investment managers, combined within efficient fund structures to reduce risk and target meaningful outperformance. Almost any asset allocation requirement can be met from the wide range of TEAMS’ active and passive fund options and within a single simple administrative framework.

The service facilitates compliance with good governance principles since all TEAMS managers are rigorously monitored and reviewed by the Escher Investment Committee.

Investec Asset Management is a specialist, international investment management company.

As at 30 June 2004, Investec managed assets in excess of £21bn globally on behalf of pension funds, governments, corporations and charities and personal investors.

Investec Asset Management is a wholly owned subsidiary of the Investec Group, South Africa’s leading investment and specialist banking group with assets under administration of £47bn as at 31 March 2004. Investec is listed on the London and Johannesburg stock exchanges.

At Investec, we understand that clients not only expect good performance from their managers, but also a clear understanding of how that performance will be achieved and sustained over time.

Capita Hartshead is the premier independent provider of pensions administration services in the UK. Recognising our service delivery, continuing development and innovation, we were awarded Third-Party Administrator of the Year in the PM Provider Awards 2004.

We are the preferred provider for a diverse host of household names and public sector bodies, some of whom have been with us for over 20 years. When reviewing current pensions arrangements, over 95% of our clients choose to re-appoint us. Our directors are pensions professionals. Our people bring a ‘can do’ attitude to their work and our clients see the benefits of this in the quality of the service they enjoy. We value our people and pride ourselves on the development opportunities we offer.

Entegria, the benefits consulting division of Hogg Robinson plc, provides a comprehensive range of employee benefit services to companies in the UK.

Operating from offices in London, Reading, Birmingham and Leeds, we have, through understanding our clients’ objectives, delivered to them practical advice and solutions and have done so for over 30 years. We form lasting business partnerships with our clients and deliver appropriate solutions in a professional manner.

Working with businesses, across many different industry sectors, our loyal and expanding base of clients recognise Entegria as innovative, responsive and dedicated to understanding and meeting their business needs. This has helped us attain our position as one of the UK’s leading employee benefits consultancies.

Legal & General Investment Management (LGIM) is a leading fund management institution with over £150bn under management.

More than £100bn is managed on an index basis and LGIM is also a leading manager of active bonds with over £33bn assets under management.

We are the largest manager of UK pension funds, managing nearly £95bn on behalf of over 2,500 UK corporate pension funds.

We offer both pooled and segregated fund management on an index and active basis for defined benefit and defined contribution schemes.

AXA Investment Managers (AXA IM) is a multi-specialist asset management company wholly owned by the AXA Group, a world leader in financial protection and wealth management. As at 30 September 2004, AXA IM managed E329bn worth of assets for a range of institutional clients and employed over 2,200 people in 13 countries.

In order to balance the benefits of scale with agility and dynamism, our investment teams are small, empowered and specialised by investment type or product. We offer investment expertise across a broad range of asset classes that few of our competitors can match, but we focus on specific areas within each asset class where we believe we can add real value for our clients. Our areas of expertise include fixed income, liability-driven solutions and UK equities.

Martin Currie is a specialist equity manager with £7.7bn in segregated and pooled portfolios for clients around the world.

Martin Currie is wholly owned and managed by its executives. This independence means Martin Currie is free to focus on delivering superior investment performance for a growing number of clients.

The company employs 44 investment staff. Product managers construct committed, distinctive portfolios according to clients’ needs. Their resources include regional and global sector research, the Dynamic Stock MatrixTM (Martin Currie’s proprietary stock ranking tool) and integrated risk management.

Martin Currie has achieved a series of high profile wins this year, contributing to record sales of £2.7bn across a range of segregated and pooled equity products.

Liability-led investing is currently something of a hot topic among pension funds and their advisers. This is not to imply that it is a fad – according to many commentators it is here to stay. As the comments from the roundtable discussion make clear, a range of factors have combined to encourage benchmarking investment performance against a scheme-specific measure of liabilities.

Liability-led investing is currently a hot topic among pension funds, consultants and fund managers. A panel of industry experts discuss what the approach means in practice and how it can be applied

Merrill Lynch Investment Managers is the fund management arm of Merrill Lynch & Co, Inc – one of the world’s leading financial services providers. With more than 600 investment professionals strategically located around the world, Merrill Lynch Investment Managers operates in all the world’s key markets, managing assets of $488bn^*.

We understand that every client has different investment needs and objectives. That is why our relationship managers work closely with clients and their consultants to ensure we can meet their liability and pension requirements. Being a core part of Merrill Lynch our clients can access a wide range of products, investment resources and specialist investment teams.

^*As at 30 June 2004

If the UK is to avert a fullscale pensions crisis at some point in the future, people will need to save saving more now. This is one of the conclusions of the interim Pensions Commission report, along with the complementary options of raising the retirement age and higher taxation.

The government has suffered a series of setbacks to its pensions reforms, with the pensions bill losing three separate votes in the House of Lords.

Over 50% of the UK’s workforce has never heard of pensions credit according to a new report. Of those who have, 40% have no idea why it has been introduced.

The Parliamentary Ombudsman is to investigate complaints over government handling of occupational pensions. DWP, Opra, the Treasury and the National Insurance Contributions Office will be investigated.

With the current bad press and doom and gloom news, you would be forgiven for thinking that the role of Secretary of State for Work and Pensions is a something of a governmental poisoned chalice. However, Alan Johnson seems to be relishing his new role, says Steve Wakelin

The very high levels of cash deposits held by small self-invested schemes (SSASs) are a cause for concern, and investors could be losing out according to some pension commentators.

Standard Life and Scottish Equitable are reported to be close to following Norwich Union in reducing commission levels for independent financial advisers (IFAs).

London Borough of Havering has awarded a fixed-interest mandate to Royal London Asset Management. The £75m mandate includes investment-grade corporate bonds, gilts and index-linked gilts.

Discussions are under way on a proposal to merge the two industry bodies that represent self-invested pensions.

The past six weeks has seen a host of new entries flooding into the Sipp market.

London Borough of Havering has awarded a fixed interest mandate to Royal London Asset Management. The £75m mandate includes investment grade corporate bonds, gilts and index-linked gilts.

In a bid to grow its occupational transfer business volume by 50% in 2005, Scottish Equitable has launched an improved and simplified trustee-proposed section 32 (tps32).

Tps32 contracts can be used by trustees to wind-up a scheme without the need for members to sign-off the transfer (as in the case of when a member cannot be contacted) to an insurance company.

New research has indicated that offering pensions advice is a core element of any future wrap, and will be fundamental to the success of the platform.

Northern Trust Global Investment (NTGI) has launched the Northern Trust manager-of-managers UK equity plus fund. The Dublin-based fund was started with £37.1m seed capital from Scottish Equitable and the Hitachi UK Pension Scheme, and will be aiming to outperform the FTSE all share by 2.5% a year.

The nascent UK wrap market could be in for a major shot in the arm, if a number of UK financial services organisations, rumoured to be developing a wrap proposition, source a proprietary technology platform from offshore.

Webline, the online comparative quote service for independent financial advisers (IFAs), is to add an annuity comparison service to its offering.

Winterthur Life has launched Morrison-line, a new information-based website and linked to its award-winning website at www.winterthur-life.co.uk/morrison-line.
Developed by pensions strategy manager at Winterthur, Mike Morrison, the site offers commentary on industry trends, the latest news, views and regulatory updates, as well as a range of relevant articles from Morrison and others within the industry. It will also provide IFAs with key dates and a calendar of all government and FSA announcements.

You’ll never guess what? Bee-keeping is going to be deregulated, that’s what! I know this because I read about it in the FT and I’ve found out loads of fascinating stuff about bees and regulation. For a start, did you know there are about 100,000 hives in the UK today? No? Nor did I, but isn’t it spooky that that’s just about the same number of pension schemes we’ve got?

This year’s PM awards lunch and presentation at the Brewery, in the heart of the City of London, was a great occasion. As well as enjoying a champagne reception, a three-course lunch and the awards presentation, hosted by Shelagh Fogarty, fresh from her breakfast show on Radio Five Live, over 400 guests had the chance to catch up with old friends, while building new contacts too.

But the highlight for many was the short, but powerful, speech from Peter Humphrey, of the Dexion pension scheme, collecting the outstanding contribution award on behalf of Ros Altmann for her work helping those who have lost pension benefits.

The audience was clearly moved and gave Peter and Andrew Parr, from the ASW scheme, the loudest ovation of the day.

Ros Altmann has championed the cause of the many occupational scheme members who lost most of the pensions when their employers went bust. None of this, however, distracts Altmann from her criticisms of the current pensions system, says Gregor Watt

Pension sharing, whilst attractive to many spouses, is not yet an exact science,‑and with the future expansion of the nature of assets which will be able to form the pension fund, it is likely that pension sharing upon divorce will become even more complex, says Angela Moores

1. No – Sipps are still a high net worth proposition and are in an ideal position to grow post A-day, particularly in view of the increased investment flexibility they are going to enjoy. Clients can have more control but some one still needs to do the asset allocation, portfolio management etc. Most people don’t have the expertise or the time to do it themselves, so will seek advice and it is at this advisory end of the market where Sipps fit very nicely.
2. I suspect a number of investments that currently cannot feature in Sipps will do so in the future, such as residential property. The proposed changes to income drawdown (re-named unsecured income post April 2006) offers greater flexibility on the amount able to be drawn down each year, which should enhance the overall post retirement proposition, thus taking advantage of new regulations. In addition, I would have thought that portfolio planning and asset allocation tools, would become a common tool kit of the advisor. Finally, fund supermarkets and online valuations will be common place with possibly Sipps sitting within wraps, if clients wish a common view across all of their product classes.
3. This has been happening for several years and there are, as usual, several ways in which providers are tackling this. Many providers have added on external fund links to their core pensions, offering the client a wider choice of asset manager. Managed and sector funds are available and, in addition, manager-of-managers funds are coming online. This gives the client/advisor access to different managers with different styles at prices they could not strike themselves, thus an element of open architecture with bulk purchasing power. Insured products are particularly good value from this point of view.
4. Individuals who have an existing tax-free cash (TFC) entitlement of more than 25% of their fund will need to protect this. Therefore, in the run up to A-Day, the TFC protection market will be a main focus of attention. These individuals need to ensure that they are in a suitable vehicle that will protect this entitlement and allow benefits to be taken without jeopardising any certification benefits, as a transfer after A-day will invalidate this protection. A s32 buyout plan is viewed as an ideal protection vehicle. However, it is important that this vehicle has everything the client may need going forward, and that includes the option of self-investment, which can subsequently be accessed post A-day if required.

1. There will still be the requirement for a basic pension product which offers fund supermarket access. The more sophisticated investor, however, will always require a more advanced investment choice. The new legislation allows even greater investment freedom so the future for Sipps has never been brighter.
2. Internet access to their individual accounts will be the most important factor. Clients will want to control their plans online so that investment decisions, switches and valuations can be made there and then. They will require a fair charging structure that reflects the level of administration needed to service their plan.
3. Administration will be the key requirement for the IFA in making a decision as to which Sipp provider they will use. Basic investment changes, valuations etc should be available online to help provide a paperless administration trail. The costs in providing this service should be competitive and offer the clients value for money, especially where there is only occasional investment activity.
4. We are already seeing the more traditional insurers opening up fund platforms and others trying to enter the Sipp market. Investment in technology is key for the traditional insurers to remain competitive in the pensions world. Technology will enable insurers to derive income from self-administered assets which will allow Sipp administration to be viable.
5. Sipps continue to be the pension product for any client wanting more investment freedom from their pension plan. The change in borrowing limits will put Sipps firmly in the minds of advisers over the next year or so. With IFAs needing to review every pension arrangement prior to A-day, consolidation of clients’ plans will be a major requirement. Sipps are ideally placed to allow clients to be in a position to step forward with confidence in the new pension environment.

1. The changes to be brought in are intended to make pensions more attractive to savers, allowing them to invest in a wider range of assets in a tax-efficient wrapper, but even without these changes the Sipp is already one of the most flexible pension options available, and increasing numbers of people are recognising the benefits.
2. The rapid growth of Sipps over recent years reflects an increasing demand for control by investors, and we can expect to see further growth in Sipps post A-day, as investors take advantage of the greater freedom afforded them. A Sipp is the only pension product which allows investors to actively manage and monitor their own retirement provision – switching in and out of investments and monitoring their performance in real time if they wish to. In addition, Sipps offer a wider range of retirement options over the age of 50 than is available elsewhere. No other product can offer the same potential to respond to changes in personal circumstances and market conditions, and it is this flexibility that is attracting clients.
3. IFAs can expect clients to become increasingly demanding when it comes to pensions, wanting greater flexibility to choose their own investments, without incurring higher charges.
4. The poor performance of many traditional pensions over recent years, combined with their lack of flexibility and often higher charges, has led to a widespread disenchantment with many of these products. Life companies must take action to increase the attractiveness of their offers and help overcome the pensions crisis we are already seeing in the UK.
5. Over the last few years Sipps have seen steady growth as they are increasingly viewed as a flexible and cost-effective solution for those who want to manage their own retirement provision, rather than a complex product suitable for only the most sophisticated investors. Even before pension investment restrictions are further relaxed, it is possible to choose from a wider range of investments than is possible with many other pensions, and the revised legislation will bring real growth opportunities to this market.

1. The essence of today’s Sipp of allowing the member to direct how their pension fund is invested, as opposed to just choosing from a range of funds, will become more pervasive. There will still be pension arrangements with a proposition that will look and operate very much like today’s Sipp or SSAS arrangements – they may just be called something different. In addition, an element of member directed investment could be offered under group money purchase or occupational DC schemes.
2. Investment choice, service delivery and price will be key, along with clear and helpful information. Online services, extended business hours, etc, will become a given. But probably the biggest demand will be in flexible retirement options – structuring annuity and drawdown funds to meet clients’ individual requirements. And that’s challenging, because few providers are likely to be in a position to provide all the options a demanding client will want.
3. Service is everything – the right things, done right, first time. Online transactions will be a key component. Sales and technical support are a given, so IFAs will look for a relationship to add significant value to their business – marketing & MIS, underpinned by in-depth market-knowledge and a comprehensive IT framework which integrates with the IFA’s back-office and website, putting the IFA in control of their business and maximising their revenue generation opportunities.
4. Some have already launched new Sipps and others are likely to follow. Existing Sipps are also being made more attractive, such as the new Scottish Equitable plan, which offers online fund supermarket trading alongside traditional equity, TIP and property options. But the big prize will be for those that link with a switched-on specialist administrator to ‘plug in’ Sipp-type investment and retirement options to traditional insured contracts. With unlimited investment flexibility and full retirement options, that’s a powerful response.
5. Today’s Sipp already offers two key elements of the post A-Day world – investment choice and retirement flexibility. Sipps are well placed to migrate to the new world of even greater investment options and retirement planning opportunities. So, for today’s pension investors, a Sipp is an obvious choice. It’s also ideal for consolidating various preserved pensions into one cost-effective, open-architecture arrangement. Now could also be the time to maximise contributions to take advantage of the investment opportunities and maximise the protection afforded to the fund accumulated at A-Day.

Sipps are well placed to become the vehicle of choice in the new pension landscape and as new, more streamlined and more cost-effective plans are developed, they’re reaching a broader market, says Chris Jones

As well as the savings in time and administration, a multi-employer scheme can allow participating employers to offer a better scheme for lower costs than they could otherwise hope to achieve, says Jacki Johnson

Although the waters of the SSAS market may appear to run smoothly – with few changes over the figures for the previous year – there is evidence for greater movement beneath the surface, says Gregor Watt

Employers could find that Sipps offer an appealing corporate alternative to risky and expensive occupational pension schemes

The factors that have made fine wine such an interesting investment opportunity have been, and will continue to be, its longevity and place in history, says Stacey–Lea Golding

Pádraig Floyd looks at interest rates paid on cash balances held within Sipps and examines the potential impact they may have on investors’ funds

In the second article dealing with the transition from final salary benefit provision, Paul Jayson describes how one company explored ways to reduce its cost and risk both for future service benefits and accrued liabilities

The need for increased transparency and openess in the industry is still a major issue, as it seems there is still some reluctance to publish even the most basic of information, says Gregor Watt

The need for increased transparency and openess in the industry is still a major issue, as it seems there is still some reluctance to publish even the most basic of information, says Gregor Watt

Watson Wyatt’s Nick Horsfall looks at how pension funds can use options to increase the efficiency of their assets

Given the damage that can be done to the fund value through exposure to low interest-bearing accounts it seems that some Sipps, including a number of the leading brands, should come with a health warning, says John Moret

Jason Shaw takes a look at an ill-health early retirement case and examines the useful guidance it provides

The shrapnel generated by Myners has not affected all pension funds equally, and it seems to have avoided some smaller schemes altogether, says Alasdair Reid

John Lawson, marketing technical manager at Standard Life, answers this month’s G60 questions on group pensions, posed by the following case study

Pensions are a long-term issue and not a four-year, cyclical one and ultimately, one that is way too important to get caught up in election play-offs to win votes, says Peter Quinton

In the past many pension funds ignored the currency market due to the lack of market return. However, after realising that market returns are unlikely to meet liabilities, focus has shifted to alpha, says Paul Lambert

Kevin Dolan is to become the new chief executive of Bank of Ireland Asset Management and the asset management services division.

In his new position he will be responsible for the £50bn asset management business, the custody and fund administration arm and the group’s interests in Iridian Asset Management, the US domestic equity investment management firm.

David Everett has been appointed as partner and head of pensions research at Lane Clark & Peacock (LCP).

Morley Fund Management have made two new additions to their equity management teams.

John Ellis has been named as group public affairs director of the CII. Ellis will take up the newly created position on 1 January when the Society of Financial Advisors and the Life Insurance Association (LIA) merge to become the Personal Finance Society, part of the CII. Ellis is currently public affairs director of the LIA.