Wed, Nov 22, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Europe's incredible shrinking pension funds landscape

Friday, November 01, 2013
Opalesque Industry Update - The move to fewer, larger pension funds in key markets such as the Netherlands and United Kingdom could work to the advantage of asset management groups, according to the November issue of The Cerulli Edge-Global Edition.

A trimming of pillar II pension funds-many defined benefit but also some defined contribution-is well underway in Europe.

Switzerland's pension landscape, for example, shrunk from more than 2,700 vehicles six years ago to about 2,100 now. Cerulli understands that in three years there will be just 1,500.

The Dutch pension watchdog is even more ambitious with a target of 100 funds. There were 672 pension schemes in the Netherlands in 2012.

Elsewhere, more work is required.

"The United Kingdom has more than 200,000 schemes, which is clearly impractical," commented Barbara Wall, a Cerulli director. "Auto-enrolment will give rise to fewer, larger pension funds known as 'Super Trusts.' With size comes economies of scale and skills, which should result in better retirement products and improved outcomes for members."

Italy is also struggling with too many schemes. There are currently 361 so called "pre-existing" pension funds, each tied to a specific company. Asset managers and investors want the number reduced because some are so small they cannot invest in a meaningful way.

"One likely effect of a fall in the number of pension funds in Europe is that larger asset managers could find working with the survivors easier," said David Walker, a senior analyst at Cerulli. "Mid-size and smaller rivals may be too small to absorb large allocations."

Another potential winner, in the Netherlands at least, is premium pension institution (PPI) vehicles, because shuttering pension funds could join them. "This would be welcome news for a structure the Dutch pension industry hoped would take off, but has partially misfired. There are fewer than 10 PPIs," noted Walker.

Other Findings:

  • There are growing concerns that U.K. employees are not getting a good deal from individual defined contribution plans. The U.K. government is looking at alternatives-including collective defined contribution (CDC) schemes, which are relatively inexpensive to administer and offer the potential for higher incomes in retirement.
  • If, as expected, Australian superannuation schemes spend more time looking overseas, they have the potential to bring considerable opportunity both on the debt and equity side. Very few super funds would feel they have the expertise to go it alone with, say, an Asia-Pacific equities strategy or European fixed income. For that, they still need external advice.
  • The number of U.S. buyouts is unlikely to increase dramatically, but it is an area that is generating interest among insurers. For asset managers, opportunities are enormous. Those possessing established relationships with insurers will benefit from flows into group and individual annuities, while others will enjoy the need for fixed-income expertise, liability-driven investing (LDI), and defined contribution investment-only (DCIO).

Cerulli

Press Release

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Middle East - Saudi-Iran war would create this domino effect of global disaster, Saudi billionaires said to move funds from region to escape asset freeze[more]

    Saudi-Iran war would create this domino effect of global disaster From CNBC.com: Events appear to be spinning out of control in the Middle East, and the threat a Saudi-Iranian war is looking increasingly credible. Make no mistake, an out and out conflict between the two nations would be

  2. Paradise Papers - Robert Mercer's effort to avoid taxes appears in Paradise Papers, Tycoon made $41m from 'people's fund', Oxford and Cambridge 'investing millions of pounds offshore', Paradise Papers reveal[more]

    Robert Mercer's effort to avoid taxes appears in Paradise Papers From Therealnews.com: The Guardian has reported that conservative billionaire and Trump backer Robert Mercer "appears as a director of eight Bermuda companies in the Paradise Papers," the trove of documents reviewed by the

  3. Wall Street hedge fund veteran hits highs with copycat tactics[more]

    From FNLondon.com: A Wall Street veteran who has made big returns for wealthy clients by piggybacking on the strategies of well-known hedge funds is taking his novel approach to stock-picking to institutional clients. Dixon Boardman, chief executive of $2.5bn fund of hedge funds Optima Fund Ma

  4. Launches - Eaton Vance, Oaktree to launch diversified credit NextShares fund, FIM launches Nordic AI-powered fund[more]

    Eaton Vance, Oaktree to launch diversified credit NextShares fund Eaton Vance Management, a subsidiary of Eaton Vance Corp., announced the expected mid-November launch of Eaton Vance Oaktree Diversified Credit NextShares, a new Eaton Vance-sponsored exchange-traded managed fund. Eaton Va

  5. Outlook - Gundlach's stock market warning comes true[more]

    From Bloomberg.com: Jeffrey Gundlach has been warning something's got to give. Based on the past two days, looks like we have our answer. Stocks fell around the world a second day and high-yield bonds headed for a fourth straight loss, resuming a historic correlation that the hedge fund manager on W