UK - Pension funds opting out of equities on mass will fundamentally change the competitive environment in the pensions market, warns Allianz Dresdner Asset Management.
The fund manager is expecting the 70% allocation of equities traditionally found in most UK pension funds to change over the next few years.
In a report, European Pensions: Reform Trends and Growth Opportunities, ADAM found the equity allocation of UK funds had already fallen from that of the mid-1990s, when funds had 80% to 90% invested in equities. But it expects this trend to continue to an international average of 50-60%.
Managing director Johann Goldbrunner said: “This structural change could fundamentally change the competitive environment in the pension market.”
The fund manager also expects equity markets to rise by an average of 6% until 2010 and bond markets to increase by 4.5%.
And it predicts low net inflows and pension market assets to grow £2.5trn by 2010, representing an annual growth rate of 5.6%.
A handful of industry heavyweights have begun trialling a so-called 'mid-life MOT', with positive initial results reported by all those involved.
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.