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London stock exchange reviews bond shift

UK – The pension scheme of the London Stock Exchange is reviewing its decision to allocate 100% to bonds in the long term.

The exchange had said in its 2003 annual report that the trustees of the exchange’s closed defined benefit plan intended “to move gradually to 100% investment in bonds over the longer term”.

An exchange spokesman said today that the “decision about whether or not to increase investment in bonds over the longer term will be kept under review”.

“In 2001, the trustees of the defined benefit scheme decided to reallocate the plan's investments so that approximately 25% was invested in equities and 75% in bonds by 31 March 2002,” the spokesman said. “The reason for this was to more closely match the fixed assets of the scheme with its liabilities.”

He added: “An update about the performance of the scheme will be provided in our annual report, which is due out in June.”

The exchange closed the scheme to new members in 1999 – and there are now only 118 active members.

The LSE scheme expects a long-term rate of return of eight percent on its 35.9 million-pound equity portfolio, the report said. The expected rate of return was 7.75% in March 2002.

The company took a net pension charge of 2.8 million pounds in 2003, up from 2.7 million pounds in 2002. It made a 15 million pound contribution to its defined benefit scheme in 2003.

The exchange paid PricewaterhouseCoopers in 2003 for pensions, actuarial and transaction-related services, up from 900,000 pounds the year earlier.

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