Pension consultant Ros Altmann says pension scheme trustees do not have enough experience of investing and have not received the right advice on where to invest.
She is calling for trustees to receive more training and focus on appropriately diversifying pension schemes.
Altmann believes trustees focus too heavily on equities and bonds and have become complacent because they have been told that funds will ride out choppy stockmarkets in the long term.
She considers that hedge funds, infrastructure, currency and private equity are all good diversifiers.
Altmann says: “Trustees have not got the right experience or have not had the right advisers in the past and have been led to believe that they do not have to worry when the market has a setback.
“Trustees still have twothirds of the money in equities. Switching any of this into bonds is probably the worst thing you can do. It is not just enough to think we are OK because we are long-term investors. There are more than two asset classes out there. You need some protection and diversification is the way to achieve that.”
Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “Pension trustees are naive. The big plcs are getting their act together on this but there is no doubt that in the majority of schemes, particularly the small company schemes, trustees are burying their heads in the sand. They are not taking proper professional advice.”