UK - The FRS17 accounting standard will prompt pension funds to increase their investments in non-government debt, according to Paul Grainger, manager of Gartmore's UK gilt and fixed interest fund.
To gauge the impact of FRS17, Gartmore carried out a survey of finance directors from 100 leading UK companies with over 60 responses so far. Of the sample in the survey, more than 40% of finance directors expressed concern that FRS17 would lead to greater volatility in their company’s share price.
35% of respondents are now considering an increase in their pension fund’s fixed income exposure.
Grainger noted: “This will lead to a continuation of the trend seen in recent years for pension funds to increase their investments in non-government debt.
“Sterling corporate bonds have performed well over recent periods whilst yields are attractive relative to gilts. As of mid-October the Merrill Lynch Sterling Non-Gilts Index yielded 5.78%, 1% more than the FTSE All Gilt Stocks Index.”
By Janet Du Chenne
In this week's Pensions Buzz, we want to know if The Pensions Regulator (TPR) is taking the right approach by naming and shaming schemes which breach their auto-enrolment (AE) duties.
Raised over £167,000
There is still time to make your nominations for the PP Women in Pensions Awards 2018. Find out more here…
The directors of collapsed construction giant Carillion were "contemptuous" of funding their defined benefit (DB) pension schemes, and "refused to give an inch", Frank Field has alleged.