UK - Greenwich Associates says 80% of UK pension funds plan to significantly alter their asset mixes in the next three years.

The consultant said this suggests recent strong investment performance has not been enough to eliminate "the many critical problems" facing plan sponsors.

Average funding ratios for UK corporate pension plans declined to 91% in 2006 from 92% in 2005, while local authorities saw funding ratios of their pension plans fall to 77% from 78%.

"These do not seem like significant decreases, but at a time in which investment performance has been robust, assets are growing and plan sponsors are making significant contributions, you would expect movement in the opposite direction," said consultant Chris McNickle.
The comments are based on the results of Greenwich's 2006 UK Investment Management Research Study, for which it interviewed 412 professionals at the largest UK pension funds between April and May, 2006.

It found that UK pension schemes are confronting several inter-connected strategic issues. The most important is determining the long-term viability of maintaining and funding traditional final salary plans.

"Integral to the question of final salary viability is the issue of how to maintain appropriate final salary funding ratios — a task made much more complicated for corporations by the implementation of mark-to-market accounting rules," said consultant Rodger Smith.