U.S. public and corporate pension plans have usually had different concerns and motivations, but a survey suggests these differences changed drastically last year.
The survey—released by Fidelity Investments’ institutional investment division, Pyramis Global Advisors—found that for the first time in its five-year history, U.S. public defined benefit(DB)plans invested in more international equities than corporate plans last year.
Also in 2006, corporate plans allocated more assets to fixed income than public plans.
“The Canadian pension industry has historically mirrored the U.S.,” says Michael Barnett, executive vice-president of Fidelity’s retirement services in Canada, “so these findings offer great insights into what could happen for pension plans in this country.”
A large percentage of corporate DB plans are open to new investment approaches. For example, 63% of plans are using or considering 130/30 equity portfolios, half of all plans say they were using or considering liability driven investing, and 19% say they would be increasing allocations to real estate.
And 80% of larger public plans are either using or considering portable alpha programs.
Chief investment officers, treasurers and executive directors from 214 of the largest DB plans in the United States(124 corporate, 90 public)took part in the survey.
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