UK - UK pension schemes are abandoning equities in favour of bonds, according to BNY Asset Servicing.

Research published today by the custodian found that the weight of equities in pension fund portfolios had fallen from 73.5% to 51.4% in the decade to 2010.

Performance and risk analytics manager Alan Wilcock attributed the findings to pension funds' efforts to reduce risk.

"Pension funds are trying to manage their funding levels more effectively," he said. "Bonds move more in line with liabilities - both fixed and inflation linked."

Allocations to UK equities fell even more sharply, from 51% to 22.7% over the same period.

However, US equity holdings increase from 4.7% to 9.7%, with emerging market equities reaching 3.5% at the end of December last year.

Meanwhile, the portfolio percentage held in bonds has risen from 16.5% to 26.7%. Allocations to index-linked bond increased from 5% to 14%.

Wilcock said: "We would expect similar trends in Europe, but with euro-denominated bonds the focus."

The median return from a UK pension schemes was 12.2% in the year ending 31 December - compared with a median annual return of 5% over the past five years.

In other news, the UK Pensions Regulator (TPR) is to target "a substantial minority" of pension schemes with poor internal controls on issues including conflicts of interest.

According to a three-year corporate plan published today, the regulator said it might introduce performance benchmarks and standards to ensure clarity over the responsibilities of trustees, administrators and scheme managers.

Noting the emergence of defined benefit de-risking strategies, the pensions body will over the next two years consider different "approaches, standards or guidance" for different segments, such as those "seeking to substantially de-risk or those that are unlikely to ever fulfil their promise of benefits for members without taking substantial risks". 

The regulator also said it would scour the market for corporate activity that might signal a reduction in corporate support for pension schemes.

Lastly, more than 30 schemes were transferred into the Pension Protection Fund (PPF) last month, including the Lambert Fenchurch staff pension scheme, with 3,099 members, and two schemes each with more than 1,000 members.

The six-year old PPF, which provides compensation to members of eligible defined benefit pension schemes whose employers have gone bust, now represents 283 schemes.

To date, it has paid out £257m in compensation to pensioners whose private sector schemes have closed down.