EUROPE - Pension fund solvency ratios in the UK, the Netherlands and Germany have fallen over the first half of 2008, a study by Lehman Brothers has revealed.
UK pension funds were the worst hit, with solvency levels falling 13% in the first half of the calendar year ending 30 June. German funds lost 9.7%, while ratios for Dutch funds fell by 8.3%.
Pension funds in the Netherlands benefited from relatively high exposure to alternative investments, such as oil and metals, as commodity prices increased to record levels, Lehman said.
Alan Rubenstein, head of the European Pensions Advisory Group at Lehman Brothers, commented: "These figures show the impact that falling equity and credit markets have had on pension funds across Europe.
"They are also a reminder of the impact that hedging and asset allocation can have on fund performance. In the UK, for example, funds that hedged their liabilities saw funding levels fall by four per cent less than those that did not.
"The relative resilience of Dutch pension schemes, meanwhile, highlights the value of diversifying portfolios through alternatives."
In another report issued today, Lehman's argued renewable energy was one of the most attractive asset classes for pension funds.
It said it combined steady returns with a long time horizon and an inherent link to the rate of inflation. It also offered ethically and socially responsible investment, which Lehman's said was key area of concern for European pension funds.
Industry Voice: Sponsored by Eaton Vance
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.