UK pensions consultant warns industry to prepare for Eurozone breakup
A leading UK pensions lawyer has warned the UK industry to plan for a potential euro zone break up if financial troubles escalate for the Mediterranean economies.
Derek Sloan, consultant in London at law firm Allen & Overy, urged pension fund trustees to spend time assessing potential broad ramifications for their schemes if some countries left the Eurozone.
Key questions trustees should be asking included investigating where assets were located, the risk of re-denominations of assets, and implementing strategies to protect assets if the euro zone broke up, he said.
Due diligence should not only extend to the scheme’s direct investments but trustees should make appropriate enquiries to their fund managers about how protected pooled assets would be if the worst happened, he added.
“Ask your fund managers where they are invested and in what assets; for example, is a cash fund a genuine cash fund? Where are accounts located and what other types of asset are held? What are your fund managers doing to protect your assets?
“The issues and risks connected with certain Mediterranean economies haven’t gone away. Trustees should spend some time questioning what the exit of countries from the euro could mean for them in the broadest sense,” said Sloan.