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London Stock Exchange moves out of equities

UK – The London Stock Exchange has confirmed that its closed £191.5m (€278.5m) defined benefit pension scheme is switching out of equities and into bonds as it seeks to redress a deficit.

“The plan’s assets are invested approximately 27% in equities and 73% in bonds at 31 March 2005 and the trustees of the plan intend to move gradually to 100% investment in bonds over the longer term,” the exchange said in its results for the year to the end of March 2005.

A year ago the exchange said it was reviewing a previous decision to allocate 100% to bonds. A spokesman told IPE last May that the “decision about whether or not to increase investment in bonds over the longer term will be kept under review”.

The scheme decided to cut its exposure to equities four years ago to more closely match assets with liabilities.

It has cut its long-term expected rate of return on its £52.4m equities portfolio to 7.9% - from 8.2% a year ago. The £139.1m bond portfolio is expected to yield 4.8%, down from 4.86%.

The company made additional contributions of £3.2m during the year, unchanged from the previous year.

Elsewhere, telecoms firm BT said that its pension deficit under the FRS17 accounting standard had fallen by £0.3bn to £3.3bn.

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