Pension funds increased their asset transfers at an annualized rate of 40% over the last three years, hitting $2 trillion in assets for 2003.
Lisa Manuele, president of Bank of New York Global Transition Management, New York, said that figure — based on industry estimates — compares with the $1.3 trillion in assets moved in 2002.
With that much money in transit — and with pension executives facing continued pressure to control costs — transition management has gained increased status.
"Transition costs were always important, but now it's critical for plan sponsors to reduce costs," said Mark Keleher, president of Mellon Transition Management Services, San Francisco. "Every dollar not returned to the pension plan in a transition is a dollar that comes out of corporate earnings."
According to Ross McLellan, vice president of State Street Global Markets LLC, a division of State Street Corp., Boston, reporting on the costs of transitions is a hot issue now as pension funds seek the lowest costs possible.
"How you benchmark the results of the transition performance is key to the transition," he said. "Plan sponsors need to demand from transition providers how the results (of the transition) will be measured," he added.