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No change in investment strategy for UK employers

UK – UK employers are not planning on changing their investment strategy and are confident that they will ride out current pensions difficulties, according to research by Aon Consulting.

In a new survey of FTSE350 companies by Aon Consulting, there is evidence of faith among employers in their ability to manage their way through the pensions challenge, says Aon.

Eighty per cent of those surveyed said they do not plan to change their current approach to pension provision over the next 12 months. Fifty one per cent considered the pensions challenge to be severe but manageable, and 43% said the issue is now of a moderate or less sever impact to their business.

With regards to investment strategy, reductions in holdings of equities were minimal further supporting the theory that UK employers are not as phased by the equity downturn as previously thought. Thirty one per cent say the downturn had made no impact on their investment strategy, 20% said they had made “small reductions” to their equity holdings, and 32% said they had made “modest increases” to their bond holdings.

Many of those surveyed, however, indicated that government proposals were causing concern. Two thirds of employers see the current proposals for government legislation as the most significant threat to the health of their pension funds.

Almost 70% of employers disagreed with the Pensions Protection Fund requirement that will make employers pay a premium to insure defined benefit schemes. More than half of those surveyed felt that, as a result of proposed legislation, costs and complexity would be increased for both the employer and employee.

Says Simon Martin, head of research at Aon Consulting: “Employers play a vital role in the provision of private pension schemes. To date, most employers feel that they have managed to put appropriate investment strategies in place to protect their company’s pension investments. However, as the government proposes more confusing legislation, employers and employees alike are being both hampered and discouraged from preparing for retirement.”

Senior executives from 35 of the FTSE 350 companies were surveyed.

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