UK - The net investment of self-administered pension funds fell by £7.9bn (€8.9bn) in the third quarter of 2009 to total just £2.8bn, the Office of National Statistics has revealed.

Elsewhere, a group of public pension policy experts have taken it upon themselves to launch a Public Sector Pensions Commission and Powys pension fund is looking to invest in a fund of hedge funds.

Latest data from the ONS quarterly report on 'Investment by insurance companies, pension funds and trusts' revealed total investment for these institutions was estimated to be £19.4bn. This is a drop of £12.3bn from the revised figure of £31.6bn between March and June.

In total, overseas securities net investment fell by £6.6bn to £11.2bn between June and September, and UK company securities moved from a net investment of £6bn in June to a divestment of £500m three months later. Meanwhile, holdings in short-term assets decreased by £6.9bn to a net £7.2bn.

British government sterling securities was one of only two asset classes to receive increased investment, with a rise of £6.8bn to £8.2bn, while 'other assets' saw a small rise of £900m to a net investment of £7.6bn.

Self-administered pension funds - usually retail occupational pension schemes with units invested in one or more managed schemes or unit trusts - saw the value of net investments fall from a revised £10.7bn in the second quarter 2009 to just £2.8bn by the end of September.

Statistics from the report showed pension funds decreased their investments in short-term assets by £6.3bn, and UK company securities by £6.4bn over the period. However, it showed pension schemes increased net investment in British government sterling-denominated debt by £5.2bn.

The Institute of Economic Affairs (IEA) and the Institute of Directors (IoD) are among two of the organisations that have established the independent Public Sector Pension Commission.

The team comprises seven commissioners and one secretary and is designed to present solutions to the growing problem of unfunded public sector pensions, following confirmation in the pre-budget report that the official estimate has reached £770bn.

It will be chaired by an independent actuary and the commission is now "seeking evidence on the potential for reform, and will produce a final report in the summer of 2010, following extensive consultation with experts from across the pensions spectrum".

Peter Tompkins, fellow of the Institute of Actuaries and chairman of the commission, said: "Never has the contrast between the retirement prospects of public sector workers and their private sector counterparts been more stark. Faced with much increased costs, a new government will need to look hard at public sector pensions policy early on after the election if it is to manage and control the costs for future generations."

Key areas of focus for the commission will be the 'pensions apartheid' between public sector and private sector pensions; the recent reforms to the public sector schemes; and practical ways to implement further reforms.

The remaining members of the commission team are:

Philip Booth, Institute of Economic Affairs, Vice Chairman David Acland CBE DL, CHK Charities Ltd Graeme Leach, Institute of Directors Andrew Lilico, Policy Exchange Neil Record, Institute of Economic Affairs Malcolm Small, Tax Incentivised Savings Association Corin Taylor, Institute of Directors, Secretary

 

And finally, the pension fund of the Welsh local authority Powys is looking to hire someone to deliver fund of hedge fund manager services.

The mandate is to manage approximately £15m of its £280m in assets under management via one or more fund of hedge fund managers.

The winning firm will be required to demonstrate depth of expertise and interested parties have until noon on 21 January 2010 to submit their proposals.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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