UK – UK pension funds may look to “lock in” equity market gains by buying bonds, according to actuaries at Aon Consulting.

“After March 31 it wouldn’t surprise me to see higher demand for bonds,” said chief actuary Donald Duval, pointing to the strong recent performance of equities. “People may say, ‘now’s the time to shift’.” There could be a ratchet effect, he said.

Tomorrow is the deadline for schemes to their forms the Pension Protection Fund and they may look to change their allocation after that date.

“I’m not aware of people having triggers in place but that’s certainly the mentality,” Duval told a briefing today.

“There’s a lot of pent-up demand for bonds,” added his colleague, investment principal Marek Siwicki. The government’s recent announcement about an increase in the supply of long-dated bonds had had a short-term effect on demand.

“You could argue a good case that now is a good time to sell all your bonds and go into something more diversified,” he told journalists.

And senior actuary Paul McGlone added that trustees were now moving towards corporate bonds and, to an extent, disinvesting from gilts.

Siwicki said: “Junk bonds, emerging market debt - that’s where a lot of the bond mandates are going.”

Duval said it was “quite a big effort” to get pension trustees to think beyond traditional equities and bonds. And it was becoming difficult to gauge bond market supply and demand because of the derivative markets.

According to the firm’s preliminary figures for March, pension deficits at FTSE companies have fallen to £51bn from £73bn a month before – thanks to strong equities markets and rising bond yields.