(December 8, 2013) — Data from 20 UK and 20 mainland European pension funds has found that CIOS from the island nation are paid as much as £40,000 less a year than their continental counterparts.
In pension funds where an external fund management model is used—and assets range between £1 billion and £8 billion—European CIOs are paid £163,000 on average, compared to just £123,000 in the UK.
In addition, the average bonus for UK CIOs us just 27% of their annual wage on average, compared with 46% in Europe.
This means the total remuneration package average is £156,000 for the UK and £238,000 for Europe, meaning CIOs in average are being paid around 52% more in compensation in European schemes.
Within Europe, the remuneration packages were broadly similar between countries, with France offering the lowest at around £220,000 and the Netherlands offering the most.
Leo Meggitt, head of the pensions and investment practice at executive search firm Flint Hyde, said the discrepancy between total wages meant that UK pension funds, and in particular, financial directors of the plan sponsor, were struggling to be competitive in remunerating their investment staff.
“Schemes with an external fund management model have increased the average salary in the past 3 years but at a very slow rate. In 2010, the average UK salary was £113,000,” said Meggitt.
“There are two main reasons for this: firstly, these positions have historically been filled by people from an accountancy or treasury background and therefore didn’t command the type of salary that investment people would expect. Even though these positions have been filled by skilled investment people for a number of years now, schemes have been slow to break the historical mold in place.
“Secondly, pension funds mostly consider this role within the context of the business activity of the sponsor. So if you join the pension fund of a retailer, your salary and bonus will be constructed in line with the other roles within that sector and organisation, rather than in line with salaries in the investment sector.”
The situation is different for those pension funds with internal asset management functions however. The likes of the UK’s Universities Superannuation Scheme, for example, have remuneration structures which have remained competitive with European equivalents, Meggitt continued.
The role of a CIO is still attractive to many, Meggitt said, as they are seen to offer a less stressful environment compared to traditional asset management jobs, but many are put off by the salary.
“The positions have become more demanding with the increased focus on the impact of a pension fund on its sponsor and there is a growing feeling that if you have responsibility for the investment strategy of a multi-billion pound fund then you should be remunerated in line with other investment sectors such as asset management,” he said.
“There will be a marked increase in the number of CIOs attracted to roles with an asset owner. European schemes, in the main, appear to have bridged this gap more quickly than UK pension funds,” Meggitt concluded.
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