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Pension schemes spread the risk

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UK pensions schemes continued to diversify their investments away from equities in 2007, according to the National Association of Pension Funds (NAPF).

The latest Annual Survey of UK pension schemes from the trade body covered the allocation of assets by 307 defined benefit pension schemes. It showed 55% of assets were invested in equities last year, down from nearly 60% in 2006. Fixed interest assets made up 29% of investments, up 3% on 2006. Alternatives and cash were also up 3% at 16%.

Of those that responded to NAPF’s survey, 47% of respondents reduced the proportion of their allocation invested in equities during 2007 and 34% increased the proportion devoted to fixed interest investments. Hedge fund investment rose from 8% to 17% of schemes’ investments last year and the proportion investing in property jumped by 10% to 60%.

Joanne Segars, chief executive of NAPF, said: “With growing scrutiny and pressure on pension scheme trustees to make sure there is a balance between risk and return, the survey shows they are increasingly viewing diversification as normal practice.”

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