Three-tenths of top schemes in surplus despite market woes
by Jonathan Stapleton 31-07-2007
THREE in ten of the UK’s largest 200 pension schemes remain in surplus despite market falls last week, latest research by Aon Consulting reveals.
The consulting firm said explained that – even though aggregate deficits rose by £9bn alone last Thursday – the top 200 schemes only saw an increase in deficits of £12bn, from £1bn at the end of June to £13bn at the end of July.
However the firm explained that although the aggregate position hid the fact that investment strategies adopted by schemes were divided between those companies with £9bn of pension scheme surplus and those with £24bn of deficit – leading some schemes to target deficit recovery and some to protect their existing surplus.
Aon Consulting senior consultant and actuary Marcus Hurd said: "Many companies and trustees are seeking to protect their surpluses with innovative solutions such as liability driven investment, whereas others are seeking to eliminate deficits by a combination of investment strategy and company contributions.
He added: “High levels of volatility, such as that demonstrated by market falls on 26th July, is likely to increase the trend of many companies and pension schemes locking into surpluses when they appear.
“The accounting basis is only one calculation of surplus, but its inclusion in company accounts and the focus of the Pensions Regulator is causing many companies and trustees to protect their scheme against this measure.”
Tuesday, 31 July 2007
Despite the recent market turbulence, plenty of pension schemes still have surpluses apparently...