Friday, March 18, 2005

US Pension Crisis Avoidable

Worried about your DB plan funding? No's some asset allocation advise for you!
Where were you 20 years ago when we needed you Guy?

UK Pension Crisis Avoidable With Greater Alternative Investment Allocation March 17, 2005 ( - The UK pension funding crisis of the 1990s that saw the end of many final salary schemes could have been avoided by allocating more assets to alternative investments, and venture capital fund of funds a manager has said. If UK pension funds had allocated the same amount to alternative investment as their American counterparts, according to Guy Fraser-Sampson of Mowbray Capital, a venture capital fund of funds, the funding crisis could have been avoided. According to reports from Dow Jones, Fraser-Sampson - speaking at theNational Association of Pension Funds investment conference in Scotland -suggested that investments in alternative investments, especially venture capital, could have saved many final salary plans."Underfunding today is a direct result of dreadful asset allocation decisions by UK pension funds over the last decade or more," Fraser-Sampson reportedly said. He suggested that if allocations had been around 20% in European venture capital after 1993, returns would have been around 13.4%, significantlyhigher than the 6% seen. This would have made plans 98% funded, instead of50%, according to Fraser-Sampson. He suggested that going forward, UK pension funds, if they want to see returns that do more than keep the fund at the status quo, should allocate more to alternative asset classes, specifically private equity.


Blogger Guy Fraser-Sampson said...

Hello, Prudence, this is Guy Fraser-Sampson. Well spotted! I see that "Pioneering Portfolio Management" is one of your favourite books, and the main thrust of my speech was to ask why on earth not a singel UK pension fund had adopted the Yale Model, given its huge success in the US.

You might like to check our website at

Thu Mar 24, 10:59:00 AM 2005  

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