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"Surprise" UK funds’ bond weighting

UK – UK corporate pension funds were 24% weighted towards bonds in 2002, according to a new survey by insurance broker and employee benefits firm Jardine Lloyd Thompson – it called the findings “surprising”.

There was no prior year data immediately available.

JLT’s employee benefits head Lyndon Jones said that the pension funds’ weighting towards bonds was “rather low” and that the “level of markets may be an inhibitor”.

Given the current debate over the role of bonds in pension fund portfolios, the firm said there was not as big a move into bonds as might be expected.

JLT found that 60% of funds had conducted an asset liability study, which made the relative lack of a shift to bonds all the more surprising.

Its consulting director Raymonde Nathan said the lower than expected bond-weighting showed that, on the whole, companies are “not making knee-jerk reactions”.

The survey, JLT’s sixth annual review of UK pension scheme compliance and standards, surveyed 240 schemes. Only 15% of respondents represented schemes with more than 5,000 members.

JLT’s chief actuarial officer Tim Evans said that the survey has found little evidence of panic in the defined benefit area. “Instead of the panic encouraged by headline seeking and short-termist press we have seen careful and sober tactical adjustment to contributions level and investment strategy.”

“Over three quarters of our respondents still have a final salary scheme,” Evans added.

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