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&#39Myners report conflicts with stakeholder goals&#39

The Government is being accused of sending contradictory messages to the pen- sion industry through the Myners report and the bench- marking of stakeholder fund performance.

Providers claim the criteria set out by Paul Myners for his report into institutional investment conflicts with Government objectives in the stakeholder market.

Gartmore chairman Myners was commissioned by Chancellor Gordon Brown to conduct a review into why big institutional investors such as pension funds fail to invest in smaller companies and venture capital, preferring to invest in bigger companies.

But providers claim the Government&#39s proposals for benchmarking stakeholder funds actively encourage them to avoid any risk, lead- ing them to invest in bigger companies.

Firms will be encouraged to follow the crowd in their investment strategies for fear of falling outside the benchmark. The benchmark will excluse the best 20 per cent and worst 20 per cent of funds.

Another bone of contention highlighted by life offices concerns investment objectives. Myners suggests investors should take a longer-term view of at least 10 years. But under benchmarking, firms will be assessed on their performance over just one year.

Scottish Equitable pensions development manager Steve Cameron says: “Myners is trying to encourage invest- ment horizons of 10 years but, under stakeholder, benchmarking firms will be judged on their performance after just one year.

“Also, investment benchmarking proposals under stakeholder will actually discourage anyone from taking an investment decision away from the norm.

“Together, these are two ways in which the proposals are encouraging what Myners aims to discourage.”


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