UK – State Street has estimated that UK pension funds returned 8% over 2012, seeing their performance overshadowed by domestic charity investment funds, which outperformed pension funds by 3 percentage points.

Revealing preliminary results for its UK defined benefit (DB) pension fund universe and the equivalent charity fund measure, State Street said investors retaining “significant real asset exposures” performed best.

Jeanette Patrizio, senior vice-president at State Street Investment Analytics, said: “Whilst positive asset returns are very welcome, trustees and fund sponsors remain challenged, with ultra-low bond yields continuing to weigh on the liability side of the balance sheet.”

The company added that asset allocation remained “largely” unchanged over the last 12 months.

“At a macro level, funds sold equity and bought bonds, likely seeking to preserve allocations in line with asset strategies, as opposed to actively de-risking,” it said.

State Street added that funds continued to seek exposure to property, despite what it considered a “challenging” environment – although it stressed that overall allocation in this asset class remained unchanged as well.

In other news, the government has once again reiterated its support for flat-rate state pension reform, following repeated delays in publishing the White Paper outlining proposals.

As part of its mid-term review, the governing coalition – consisting of the Conservative Party and junior partner Liberal Democrats – published its plans for the remaining time in office.

In a statement, it said: “Reforms to provide dignity in old age are to be outlined, including an improved state pension that rewards saving, and more help with the costs of long-term care.”

The state pension reform has been subject to several delays, with a White Paper initially expected in spring 2012.

Pensions minister Steve Webb previously indicated that the paper would be published before Christmas.