UK – US-based pension consulting firm Watson Wyatt Worldwide is putting $7m (€5.5m) into its underfunded UK pension funds – despite an almost 10% return on investments.

The company said in a filing at the Securities and Exchange Commission that it made $2.2m in contributions to the UK plans during the third quarter of fiscal year 2006 and that it anticipates making $4.8m in contributions over the remainder of the fiscal year.

The firm has cut the expected long-term rate of return to 5.63% from 5.76%. It said this was “supported by an analysis performed by the company of the weighted average return expected to be achieved with the anticipated makeup of investments which is heavily weighted towards bonds”.

“The return on assets through the first eight months of fiscal year 2006 has been 9.8%,” it added.

The filing revealed a wide difference between the expected long-term rate of return on assets between the UK and the US and Hong Kong.

The US figure of 9% compares with the UK’s 5.63%.

A spokesman said that an actuarial valuation of the Watson Wyatt Pension Scheme is being undertaken as at March 31 2006. He confirmed the fund is not fully funded and strongly weighted towards bonds, though he couldn’t provide further detail on asset allocation.

The US’s 9% return expectation “was supported by an analysis performed by the company of the weighted average yield expected to be achieved with the anticipated makeup of investments”.

“The investment makeup is heavily weighted towards equities.” The return on assets through the first nine months of fiscal year 2006 was 8.7%.