Lloyds pension schemes look to diversify risk investment strategy

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UK - The HBOS Final Salary Pension Scheme (HBOS FSPS) and other pension plans at Lloyds Banking Group are seeking to diversify their source of risk by investing in new asset classes.  

Commenting on news reports that revealed the HBOS pension plan would be looking to invest more in infrastructure and reinsurance products, Simon Lee, head of investment for Lloyds Banking Group pensions, told IPE: "All schemes within the Lloyds Banking Group are looking to diversify their risk return across several asset classes."

The HBOS pension fund is one of the largest schemes in Lloyds Banking Group, with £8.4bn of assets under management.

Equities and alternative assets combined returned 8.3% for the HBOS final pension scheme, according to the bank's 2010 annual report.

In its interim financial results for the first half of this year, HBOS also noted that the main equity market risks were evident in its life assurance companies and staff pension schemes.

"Credit spread risk arises in the life assurance companies, pension schemes and banking businesses," it said. "Equity market movements and changes in credit spreads impact the group's results."

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