UK Equities and Emerging Market Equities Drive DB Pension Returns

(January 6, 2011) — UK defined benefit pensions returned approximately 13% in 2010, a decrease from 15% in 2009.

A report by State Street Investment Analytics’ WM UK Defined Benefit Pension Fund Universe showed the return estimate was aided by UK equities, which returned an estimated 15% in 2010, and emerging markets equities, where returns were as high as 25% in some countries. According to State Street, public UK pensions benefitted from higher equity allocations, outperforming corporate plans.

SSIA noted that continental European equities only offered growth of 6% for the year, following the UK, as well as North America, Japan and Asia Pacific, which returned between 17% and 25%. State Street’s research showed a small shift from equities to bonds in DB schemes last year, with equity weighting falling from 51% to 49% and bond weight rising from 33% to 35%.

Meanwhile, BNY Mellon said UK and international bonds posted gains of 7.2% and 9.9%, respectively, for the year, while real estate returned an estimated 9.6%.