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Autif&#39s McMeehan slams &#39short-termist&#39 pension fund strategies

Pension trustees and fund managers are becoming “short-sighted, short-termist and lacking in vision” and will continue to move towards less volatile investments, according to Autif director of communications Anne McMeehan.

The increasing frequency of reviews of investment strategy of pension funds means individual managers will want to be sure of some positive returns over shorter periods to be retained, and will lead to more pension funds following the Boots pension fund out of equities and into bonds, said McMeehan, speaking at IFA UK last week.

McMeehan said: “Forgive me for my cynicism but pension mandates are being reviewed over increasingly shorter periods. The average pension fund manager&#39s mandate is now for three years. If a pension fund manager knows he may lose his mandate he will feel the need to generate more secure income.”

Boots has come in for criticism for responding to the bear market by switching its pension fund entirely into bonds to meet its defined-benefit pension obligations.

Edinburgh Fund Managers managing director Harry Morgan said: “I think Boots&#39 decision is extraordinary. They are only buying triple and double-A-rated bonds when quality corporate bonds have been performing better. If there is an oil price shock and inflation goes up they will see the value of their returns hit badly.”

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