UK - The switch to total bond investment by the near £2.3bn Boots Pension Scheme is unlikely to cause a "stampede" in the same direction by other funds, according to the National Association of Pension Funds.
Speaking to mainly institutional investors, David Cranston, NAPF’ s director general, said that the move to 100% triple A-bonds was not an “overnight decision” for the fund, and cautioned that the controversial strategy was not right for everyone:
“It’s obviously a decision that the Boots pension scheme has taken, and taken very carefully. This is not something that has happened overnight. I think for the past eight years to ten years a number of schemes have been shifting from equities to bonds.”
He added: “Boots have obviously done it wholesale and they have done it for reasons which suit their scheme, suit their liabilities. It won’t be everyone’s choice; different schemes have a different structure, different liabilities and different aspirations. So it is right for Boots, it may not be right for everyone. Certainly it is not necessarily the beginning of some sort of stampede.”
Cranston also said that new accounting standard FRS17 - that requires businesses to highlight pension fund surpluses/deficits on their balance sheets. - was just one factor that “drives those sorts of decisions.” So far ICI, BT, and Sainsbury’s are among the pension funds that have cut by closing its final salary scheme to new members.
*Cranston was answering questions via interactive corporate communications service. Cantos. He also commented on issues around boardroom pay; the Myners’ review, and stakeholder pensions.
By Madhu Kalia
This week's top stories include ITS' management buyout from Mercer, and The Pensions Regulator launching a probe into single-employer defined contribution schemes' default funds.
People retiring in the UK will on average outlive their pension savings by 10 years, according to research by the World Economic Forum (WEF).
Steps to improve auto-enrolment are uncontroversial and obvious, but the government is dawdling on introducing the necessary changes, argues Jack Jones.
Professional trustees will be expected to apply for accreditation as part of a framework intended to be launched on 1 July by the Professional Trustee Standards Working Group (PTSWG).