UK - UBS has forecast that pension fund deficits could fast disappear despite a 30% fall in assets since 1999.
In its annual report – Pension Fund Indicators – UBS said that estimates of £100bn in total pension fund deficits for the UK were “alarmingly volatile”, but struck a note of optimism for recovery.
It forecasts total pension assets to grow to around £1400bn by the end of 2012 compared with about £800bn at the end of 2002.
The fund manager also pointed to a change in strategy by pension funds to tackle liabilities.
UBS said that while market falls had reduced pension assets, a combination of rising longevity and lower real bond yields meant a larger fund of assets would need to be accumulated to finance a given retirement income than previously.
A switch to later retirement and falls in state benefits would see people working for longer and accumulating more pension assets, the report claimed.
However, the extent of pensions liabilities is expected to change the way pension schemes are managed.
Head of UK equities Andrew Maclaren said: “We expect to see a renewed focus on the fundamental asset allocation needs of pension schemes and increased usage of non-traditional investment solutions as pension funds focus on the nature of their liabilities rather than on peer group and index comparisons.”
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