The man credited with engineering one of the most radical asset allocations by a U.K. pension plan hopes to further shake up thinking among U.K. plans sponsors and their trustees.
John Ralfe, former head of corporate finance for Boots PLC, Nottingham, England, left the group late last year and has set up a firm to advise companies on managing their pension plans.
"Where pensions have gone wrong over the last 30 years is that asset management and the plan structure and benefits have been compartmentalized. People have not been making the links between what happens in one area and another," he said. Mr. Ralfe intends to "push, persuade and encourage everyone to look at the various alternatives."
"It's about putting pensions issues into a broader context of the company's capital structure and relating it to the interests of the shareholders and bond holders, as well as looking at its impact on a company's ability to raise funds and refinance debt," he added.
He admits that potential clients might expect him to advise only a Boots-type approach, where the plan may be encouraged to dump its equity allocation and go wholesale into bonds. But he intends to view each plan on its own merits. "The answer does not have to be the same, but the decision-making process must be as robust," he said. "But from a markets point of view, those that believe in mean reversion are kidding themselves."
Mr. Ralfe left Boots late last year under something of a cloud after allegedly falling out with the firm's newly appointed finance director. But he would not comment, nor would he comment on speculation that Boots or the trustees of its pension plan are considering reversing the 100% fixed-income allocation.