HSBC says UK pension funds fell 11.3% in 2001

UK – The value of UK pension funds fell by 11.3% during 2001, effectively eroding the gains secured during the previous five years, claims HSBC Actuaries and Consultants’ latest IMAGE Performance survey.

The survey provides performance statistics using capital growth and contribution payments on a monthly basis for 39 discretionary balanced pooled pension funds and five consensus funds.

According to the report, the decline in value is the worst seen since the annual IMAGE survey was launched in 1991. And the gains over the last five years averaged out at only 6.4% per year, which is just 0.2% more than cash.

Says Paul Audu, senior investment consultant at HSBC Actuaries and Consultants: “The FTSE All-share index has fallen 13.3% over the last 12 months and 18.5% since the end of December 1999. Most pension funds have around 50% of their assets in UK shares and a further 25% in overseas shares, which also fared badly. It is not surprising that the returns have been so poor.”

However, the survey also reveals that managers are optimistic about equity market performance this year. It says that at the end of September last year, just over 6% of portfolio holdings was in cash, but this had fallen to 3.8% by the end of December in favour entirely of equities.

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