Featured in the Financial Times:
In Josephine Cumbo’s article, the newly appointed chief executive of The Pensions Regulator, Nausicaa Delfas, makes a bold threat: “We expect defined contribution (DC) trustees to look at whether or not they are competent to conduct these kinds of [illiquid] investments and when not, then they should really look to consolidate their scheme or wind it up.” (Report, July 25).
Most DC funds are not yet competent. They still face a significant data dilemma before they can safely invest beneficiaries’ assets in spaces like private markets. The reality is the operational processes surrounding private assets differ considerably from those associated with the “safer” assets pension funds typically invest in. Private assets inherently exhibit very different risk and return characteristics than their public counterparts. While public equities offer daily price transparency, the valuations of private assets are not readily available. As a result, risk assessment and performance forecasting processes become all the more challenging, costly and resource intensive.
Read more here.