UK - Higher discount rates in the UK have been matched in all major retirement markets globally, a report by Towers Perrin shows.
The report - Global Capital Market Update: Second Quarter 2004 - examines how defined benefit pension plans in major retirement markets have been affected by market changes.
It says higher discount rates have offset poor investment returns which were only marginally positive in most markets due to global equity nervousness caused by continuing geopolitical instability.
The report examines the impact of changes in stock and bond markets on plans in each country, with liabilities estimated under accepted international accounting standards and adjusted to reflect current interest rate and other market conditions in each country.
In the UK, discount rates have risen four times in the last eight months, with consecutive 25 basis-point rises in May and June.
The benchmark portfolio return for UK pension plans was 0.85A%.
Combined with higher discount rates this led to an improvement in UK benchmark plans of 3% on the second quarter.
Towers Perrin calculated that in the second quarter of 2004 benchmark plans increased in the US by 2.52%, Japan 5.5%, eurozone 5.07%, Australia 2.87% and Canada 6.13%.
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