There are some things we get so used to, we forget to question how worthwhile they are or what purpose they serve - things such as the peer group benchmark used by most Irish pension funds.
About 70 per cent of British pension funds measure their performances against tailored benchmarks using indices.
Because of the three-monthly peer ranking system adopted here, Irish pension fund managers have to keep an eye on the rear view mirror while they try to stay with the pack.
Mr Tom Geraghty, senior investment consultant with Mercer, said pension fund trustees who "hire and fire" pension fund managers on the basis of short-term performance were not necessarily acting in the best interest of their funds.
"Pension fund trustees must have a clear mission on what they wish to achieve. Traditionally, trustees have tended to adopt a peer-group approach to setting long-term strategy, which didn't necessarily take consideration of the specific liability profile of the plan."
Mr Geraghty told delegates attending a recent pension conference that pension fund trustees needed to be better resourced and better trained to enable them to make the best decisions on behalf of pension scheme members.
Long-term pension management strategies should be influenced by a number of key strategies, Mr Geraghty explained, including;
what is the appropriate active /passive management mix?
what style of investment strategy is appropriate?
are global or regional managers appropriate?
what is the optimal number of managers?
what charges/commissions are being incurred by the scheme?
Mr Geraghty said it was Mercer's view that the whole approach of the "manager merry-go-round" did not represent a strategic focus.
"We are advocating a more strategic approach in terms of the investment cycle, and better governance with regard to the pension fund assets," he explained.
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