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UK roundup: investment strategies, BG pension scheme, Pitmans Trustees

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  • UK roundup: investment strategies, BG pension scheme, Pitmans Trustees

UK - Most final salary corporate pension schemes have continued to move away from equities and into bonds, although many still see opportunities in stock market volatility, according to Aon Consulting.

Elsewhere, the BG pension scheme has appointed Hymans Roberston as its investment adviser, and latest figures from Pitmans Trustees suggest a continued growth in the independent trustee market. 

Aon's survey of 82 mid to large employers with final salary pension schemes showed 59% had changed their pension investment strategyies which is an increase of 10% since 2008, with 40% implementing a move away from equities and into bonds in an attempt to limit volatility exposure.

Findings from the 2009 survey also highlighted a growing number of employers that see opportunities in the stock market volatility, with 16% switching from bonds into equities. This is more than five times higher than the 3% of respondents that felt the same way in 2008.

Results of the survey showed that UK property remained the most popular diversifier with 43% of schemes utilising this asset class, while 40% use diversified growth funds, which has increased from just 20% in 2008.

The use of liability driven investments (LDI) strategies fell slightly over the year with just 11% of schemes adopting the approach against 13% in 2008. Overseas real estate saw the biggest fall from 18% of respondents in 2008 to just 8% a year later.

A number of employers appear to have adopted a buy-in or buy-out approach, with 11% of respondents noting they made use of annuities purchased in the name of trustees, compared to none in 2008.

Mark Powley, investment principal at Aon, said: "While the majority have changed investment strategy, the options are far from clear cut. Equities are a double-edged sword, with the majority taking flight into the safe haven of bonds, but a significant and growing number have gone back into the stock market."

"At the same time there is also greater awareness among schemes of their funding levels and they are taking advantage of any short-term opportunities that arise in order to further de-risk," added Powley.

The £700m (€845m) pension scheme for employees of the oil and gas company BG Group has appointed Hymans Robertson as its investment adviser.

Hymans will provide the scheme with advice ranging from investment strategy and structure to manager selection.

Paul Cox, secretary to the scheme, said: "We went into the review process seeking a fresh approach to our investment advice. We wanted to appoint someone who would provide innovative advice, focused specifically on our scheme's requirements."

Pitmans Trustees Limited has confirmed it received 16 new pension appointments in the year to April 2010, demonstrating the continued growth of the independent trustee market.

The company's annual results showed a 30% growth in revenue; alongside the new appointments the firm also recently acquired the business of SBJ Trustees.

Richard Butcher, managing director at Pitmans, said: "It is clear that the independent trustee market is growing at a strong rate as schemes begin to understand the benefits professional trustees can bring to their boards."

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