Market losses wiped more than £21bn off UK occupational pension fund assets last year, new research by Phillips & Drew reveals.
The study puts total assets at £755bn for last year - £776.6bn in 1999. The figures mean that UK pension fund assets have grown in real terms by around 7% since the end of 1963. Over the last five years pension funds’ total assets have increased by almost 28%, from £543.9bn.
The report – Pension Fund Indicators – said pension fund assets per scheme member – both active and retired – is on average £60,000.
And the report echoed concerns on the future of pension provision voiced by new NAPF chairman Peter Thompson at the annual NAPF conference.
The report warned: “Assets per member will need to rise further from this level to cover increasing earnings, the likelihood of lower long-term real returns from most asset classes, and increasing life expectancy.”
Asset class total returns in 2000 showed that overseas bonds was the most successful class, returning 10.5%.
UK equities performed poorest over the last 12 months with -5.9%. Property was a strong performer (10.4%) and gilts returned 8%.
In 1999 – the year in which the enormous interest in internet stocks sent markets soaring – overseas equities returned a massive 31%, with UK equities not far behind at 24.2%.
The report said: “The average returns over the last 38 years and 10 years support the conventional view that equities do best over the long term. However, the scope for adding value by shifting between markets at the right time is considerable, since the average return on the best sector is much higher than the the returns for UK or overseas equities alone.”
The report added: “Equity investment is still sensible in order to pursue higher returns, but will result in more volatile funding levels.”
By Alistair Graham