Over a third (38 per cent) of pension scheme trustees with fiduciary managers are planning to review their manager before mid-June according to new research by Hymans Roberston.
The pension consultants said this is “worryingly close” to the deadline to comply with the Competition and Markets Authority’s retendering ruling. This it said could create a capacity crunch in the market with fiduciary managers struggling to respond to all tender requests by the deadline.
Hymans Robertson senior investment consultant Samora Stephenson says: “The purpose of the CMA’s call to retender fiduciary management services was for schemes to not only demonstrate good governance but to ensure that fiduciary management provides value for money for the scheme.
“It is a concern, then, that over a third (38 per cent) of schemes are estimated not to have started the ball rolling on this.
“As the deadline looms, this is a real opportunity for trustees to ensure they are getting the best from their fiduciary arrangements. As a result of activity driven by the CMA order we are already seeing many schemes benefit.
“Trustees are also gaining a better understanding of what is driving their fees and costs. This retender process allows all schemes to question whether their evolving needs are being met, particularly key when the last 12 months will mean that some schemes are in a very different position compared to last year due to the fallout from Covid-19.”
She adds: “If trustees want to avoid a stampede of market activity ahead of June, fiduciary management tendering needs to be at the top of their agendas over the next few weeks. It can take up to two months to run an effective tender process from beginning to end and time is of the essence.
“We urge schemes to act now as not only will they avoid regulatory wrath but there is the risk that waiting longer could lead to disappointment because trustees’ chosen fiduciary managers may be too busy to participate in tender exercises. Ultimately, rushed tender exercises are less likely to yield good outcomes.”
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