Invitation for Funding Proposals: Real Estate Allocations within Retirement Saving Schemes

Document description

Over the ten years to 2010, Defined Contribution (DC) schemes’ share of UK pension funds is estimated to have risen from 3% to 40%, amounting by the end of the decade to in excess of £500 billion.  This has been largely at the expense of Defined Benefit (DB) schemes.  Confronted by increasing longevity, a changing regulatory environment and weakening of sponsor covenants, the majority of DB schemes are now closed to new entrants.  The shift to DC can therefore be expected to continue, and have a significant impact on asset allocation decisions.  According to a recent report by the EDHEC -Risk Institute and sponsored by AXA Investment Managers, DC pension schemes are "under-diversified" and need to adopt asset-liability management strategies to tackle inflation and longevity risks. 

Proposals are sought to research the impact this move might have on the way assets are allocated in pension funds.  The Institute & Faculty of Actuaries (“I&FoA”) is concerned about how the change will impact on overall exposure to equities, bonds and other investment options, whilst the Investment Property Forum (“IPF”), European Public real Estate Association (“EPRA”) and Association of Real Estate Funds (“AREF”) are particularly concerned to ascertain what might be the results of the DB to DC shift in terms of exposure to commercial property. 

This document gives the full description of the required research.