UK - The WM Company, the investment performance measurement company, said that UK pensions funds have returned a solid 11% in 2004 on the back of a strong equity performance in the last quarter.
With two years of steady growth behind them, pension funds have recovered most of the losses they sustained during the savage bear market between 2000 and 2002, the company said.
However, WM warned that though the 2004 result was a good outcome, it needed to be put in perspective.
Graham Wood (pictured), a senior consultant at WM said: “Low interest rates, improvements in life expectancy and modest inflation continue to cause the general deterioration of funding positions. Recovery will require more years of similar or better investment returns and/or higher employer contributions.”
For the year, UK equities finished strongly to post a total return of 12.7%, while overseas equities in aggregate also rose over 10% in sterling terms.
Europe ex-UK (13.7%) and Pacific ex-Japan (nearly 17%) equities did well, while Japanese equity performance recovered at the end of the year to finish at 8.7%.
North American equities gained around 12% in local currency terms, but the depreciation of the dollar – which fell by 7% against sterling in 2004 – meant that sterling investors netted less than 4% for the year.
Despite rising short-term interest rates, UK bonds and Index linked performed relatively well, with 2004 returns around 7 to 8%. Overseas bond returns were again affected by the weakness of the dollar, and closed for the year up just under 5%.
Property continued its extended run of strong results to finish the year up approximately 16.6%.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.