Latest figures from Willis Towers Watson show fiduciary management clients benefitted from superior funding levels and investment performance
The figures are revealed in Willis Towers Watson's latest update on funding level outcome figures to the end of 2016 for clients who outsource their investments on a fiduciary management basis. This is the second year running that Willis Towers Watson has published figures relating to the performance of its Delegated Investment Services business. Reflecting its continued commitment to improving the transparency, measurement and reporting of meaningful performance figures for clients making full use of its delegated services it also prepares client composite returns in line with developing industry efforts.
Ed Francis, EMEA head of Investment at Willis Towers Watson, said: “2016 was particularly challenging for DB pension schemes. Despite signs of recovery towards the end of the year, scheme funding levels fell sharply over the first eight months of the year, with the average scheme ending the year down nearly 4%. In contrast, our clients saw an average increase of 1.5% in funding levels over the year.”
In addition, the volatility in funding levels experienced by schemes outsourcing their investments to Willis Towers Watson was two-and-a-half times lower than that experienced by the average scheme over the same period, meaning sponsors have seen significantly lower levels of variability in funding requirements than the industry overall.
Pieter Steyn, UK head of delegated business at Willis Towers Watson, said: “Our service has helped clients with assets ranging from £40 million to well in excess of £3 billion move much closer to their ultimate objectives. This way of addressing the DB pensions problem works because it gives funds scale and therefore buying power, but also scope to build investment portfolios that are more robust in uncertain market conditions.
“Together, this combines to create a compelling case for increased use of the fiduciary model – in our firm’s case we saw a good number of UK clients adopt the model over 2016 for their total assets representing nearly £5bn of additional client money under our discretion,” added Pieter Steyn. “One of the interesting findings from our clients’ results is that higher levels of liability hedging did not solely contribute to this risk reduction. It was the combination of a highly diversified return-seeking allocation and effective liability risk management which contributed to the significant level of risk reduction relative to the average scheme.”
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