Pension schemes struggling with portfolio data

GPs can get in their investors' good books by making portfolio level data readily available, says a recent survey.

More than a third of European pension plans do not have access to the portfolio level data needed to complete their regulatory requirements, according to a survey from financial services firm State Street.

Private equity firms able to satisfy LPs' thirst for portfolio information are likely to boost their prospects on the fundraising trail. The survey also found that 60 percent of the pension schemes will increase their allocation to alternative investments over the next three years. A contrast to their actions over the previous three years, during which time only 28 percent increased their exposure to alternatives, according to the survey.

The survey, which received 150 responses from defined benefit and defined contribution pension schemes in Germany, Italy, Netherlands, Switzerland, UK and the Nordics, also revealed that pension funds see these demands from internal governance and risk management functions as an on going struggle, with 87 percent citing this as a challenge that is expected to escalate in the next five years. <not enough="" distinction="" from="" first="" graph.="" in="" other="" words,="" more="" than="" a="" third="" of="" lps="" do="" not="" have="" access="" to="" the="" data,="" but="" 73="" percent="" say="" they="" major="" data="" challenges?="" sure="" what="" you="" mean="" here.="" may="" also="" need="" line="" or="" two="" explaining="" exactly="" which="" regulatory="" requirements="" are="" struggling="" with="" provide="" context. 

For instance, the Netherlands has a strict regime where pension funds need to look through unitized and pooled fund investments to the underlying assets for their reporting requirements with Dutch pension regulator De Nederlandsche Bank.

These challenges have been made more difficult by a lack of accurate data, 40 percent of pension plans said they do not have access to accurate portfolio investment data. Pension funds are wanting to review the portfolio metrics to help them figure out their overall risk exposure, Ian Hamilton, head of asset owner sales for State Street Global Services, told PE Manager.

“Everyone is looking for more detailed granular information, so they want to look deeper into their investments and also make sure they have the overall picture across that whole investment.”

“What they [pension plans] are looking for, especially from their service providers, is to provide a catch all for data,” added Hamilton.

He said pension plans want all their information in one place, and on a consistent basis, so they can make better investment decisions and more easily meet their regulatory requirements from the overall information rather than having to make the data consistent themselves.