…While UK Pensions Fear the Worst
(April 25, 2013) – Economic uncertainty is continuing to give UK pension funds the jitters, with the Cyprus bail-in and the non-election in Italy haunting Eurozone markets, according to Baker Tilly’s ‘Pension Scheme Trustee Confidence Survey 2013’.
The adviser found pension investors felt this uncertainty will hamper economic growth and investment performance, as well as increasing volatility within gilt markets.
Scheme solvency is also a pressing issue: when asked about the year ahead, 60% of respondents to the survey cited a funding issue as their main concern.
“For some it was simply meeting their investment performance objectives or the volatility of interest rates and gilt yields, while others cited derisking and forthcoming valuations as their biggest challenges for the next 12 months,” the report said.
Derisking was one of the major themes within the report – when asked how their scheme has adapted to the current market turmoil, 32% said they had reduced equity investment, with a further 32% saying they had followed a different strategy, such as increased diversification.
Tellingly, only 7% have increased their investment in equities.
Bruce Mackay, head of covenant assessment services at Baker Tilly, said: “Our survey found trustees are unsurprisingly taking a cautious approach to managing their schemes.”
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