Emma Adair of Cardano looks back on another big year for pensions

It's almost Christmas - the time of the year we celebrate amidst tinsel, turkey and festive cheer. While we wait for Santa's decision on who has been naughty or nice, we take a look at some of the big stories of 2014.

The gift of freedom! – By now the April budget announcements have probably (just about) sunk in.?It would be hard for anyone to argue against the gift of freedom, but the radical budget reforms did leave the pensions industry scrambling around to make them work.

As we prepare for April 2015 we are looking forward to seeing what choices people are actually going to make, and how that will drive a DC new world.

Interest rates misbehave – At the start of this year the question everyone was asking was not whether rates would rise but when. There was only one way for interest rates to go. Now here we are in December and we are still waiting?.

Are these lower levels here to stay? With the UK being amongst the fastest growth developed economies this year, the marked fall in inflation expectations and low growth in Europe we may well need to wait for a little longer.

If 2014 has taught us one thing, it is the unpredictable nature of interest rate markets, which highlights the attraction of hedged robust Liability Driven Investment strategy.

High performing funds – but at what cost? - There was renewed focus on manager fees after US public pension fund, Calpers, announced plans to eliminate its hedge fund programme.

Although their decision was not so much about the cost of the investment, but the governance burden, it did bring fund managers fees into the spotlight.

No one likes paying manager fees but if you have the right manager and the net result is better than your bottom line improves. Good manager selection is about identifying those who have the skill to produce the levels of outperformance after you pay the fees. Net results count.

Auto-enrolment – a continuing success? – Initial results suggest that AE has been a pretty successful initiative to help people save for retirement. Initial research from the DWP quotes participation rates going from 36% to 71% after the introduction of AE. And opt out rates tended to be centred in the over 50s age groups.

The big question now is what happens next as more and more pension funds start the process. Are we going to get the same levels of engagement?

A new phase for fiduciary management - Fiduciary management continued to grow in popularity in 2014. According to KPMG, the sector saw growth of 44% during 2014 and reached ?38bn in assets under management.

Certainly at Cardano, where we have been delivering stable steady growth in our clients' funding ratios for six years now, we can see the market is entering a new, mature phase.

The early adopters of fiduciary management are definitely starting to take a closer look at the results that have been achieved, and want to see how they compare to the rest of the market... It will be interesting to see if any of the fiduciary managers join us in publishing their track records and providing pension funds with the much needed transparency on results.

As we approach the end of the year, 2014 definitely feels like a big year for the pensions community. There is definitely no predicting what lays around the corner in 2015, but I can't help thinking there is more to come.
We wish you a peaceful and restful holiday period (assuming the equity markets don't remain too volatile and keep you all at your desks!)

Written by Emma Adair, Head of Client Management, Cardano