UK- 2001 saw an increased number of UK pension schemes adopting their own fund specific benchmarks according to the latest Russell/Mellon CAPS pension survey. The increase continues a gradual trend evident throughout the 1990s- in 1990, only 4% of pension funds used their own benchmark opposed to 68% at the end of 2001.

Adoption of specific benchmarks accelerated during the late nineties and the latest figure represents a 70% increase since 1998 when only four in ten schemes had their own.

The survey suggests that returns for funds with their own benchmarks are more tightly correlated than for those funds without. In addition, schemes with specific benchmarks had a good year, relatively speaking, with 59% managing to outperform their self-prescribed targets by an average 0.3% in 2001.

Alan Wilcock, head of research and development, predicts that every fund will have its own benchmark within the next two years. The survey results suggest Paul Myners’ recommendation last year that pension funds adopt specific benchmarks was preaching to the converted.

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