UK - Pension schemes are not looking to follow Boots Pension Scheme which has sold all its equities and switched to a 100% bond portfolio. Indeed, some believe it is a good time to buy "cheap" equities.
National Association of Pension Funds (NAPF) spokesman Andy Fleming confirmed: “We do not see this as the start of some mass movement out of equities.”
But he conceded there was a current gradual shift by UK pension schemes out of UK equities into bonds.
The NAPF has attributed the move primarily to the ageing demographic profile of many funds but noted that it was also partly due to the new FRS17 accounting rules.
The £3.4bn Marks & Spencer Pension Scheme - which has made a “gradual” move out of equities into bonds over the past two months - has cited FRS17 as the reason for its decision.
Other schemes say they had already made what they consider “major moves” into bonds and insist they are not about to make any further big changes.
The £5.4bn Marconi pension scheme increased its bonds asset allocation to 20% bond two years ago. Pensions manager Rosemary Mounce said it was gradually increasing this allocation, but only in response to the growing maturity of the scheme.
The £3bn London Pensions Fund Authority pension fund also reported that it had made a £1bn switch into bonds in 1993 to match liabilities, but now was looking to take a more active stance.
Chief executive Peter Scales said: “We can now be a little bit more active now because we know our liabilities are still 20-30 years off.
“The markets are very low and the prognosis is that they will move back upwards over time.”
And commenting on the Boots move he said: “It seems like an odd time to do it - I would have thought most investors are not busy selling equities at the moment.
“You do not want to lock in the losses on your equity portfolio.”
The £3bn Diageo pension trust - which holds 90% equities - reported that it had not yet come under pressure to buy bonds because of FRS17.
By David RowleyPensions manager Graeme Robertson said: “We have seen a sharp dip in the assets value of the scheme as everybody else but we can see it gradually rising again.”
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