The findings reveal the number of active members between 2013 and 2015 increased from around approximately 1.7 million people to 2.1 million. Contributions from local government to their pension funds also increased by 31 percent, and contributions from members rose by six percent.
Nick Wright, head of UK, Middle East, Africa, Netherlands and Nordics at State Street said, “LGPS member funds are facing huge challenges but overall we believe they are positioned well with the asset pooling project. We can see that they are investing a lot of time and energy in ensuring they understand the operational and regulatory challenges ahead of them, and are developing strong strategies.”
An additional survey of 400 pension professionals, commissioned by State Street, found the sector is facing significant challenges globally.
Four out of ten (40 percent) of the respondents, claim it’s getting harder to ensure that they don’t breach local regulatory limits on exposure to specific asset classes. To improve operations and efficiency levels, 61 percent are looking to insource more risk management tasks; and 53 percent intend to carry out more investment related functions in-house.
Andy Todd, head of UK pensions and banks, Asset Owner Solutions at State Street said, “As pension funds come under pressure to deliver better long-term returns to members at lower costs, it’s clear that pooling knowledge, as well as assets, is not solely a cost-saving measure, but also as an important means of developing new capabilities and opening up fresh opportunities.”
With this in mind and as funds expand, asset owner governance will fall under review. 61 percent say that they intend to adjust the balance of responsibilities between their Fund’s board and management; 51 percent are looking to increase the autonomy of their investment function; and 48 percent are looking to change their process of recruiting new board members.
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