Wednesday, January 30, 2008

Pension funds lose trillions in share slump

Reuters
Published: January 30, 2008

LONDON: The global share sell-off may have wiped up to $1.5 trillion (753 billion pounds) off the value of global institutional pension fund assets since the start of this year, consulting firm Watson Wyatt said on Wednesday.

With the average allocation to equities within pension funds in the 11 largest pension markets at 56 percent, they have felt the pain of the global equities market slump, while pension liabilities grew faster than their assets last year, said Watson Wyatt.

"2007 was a year of two distinct halves," said Roger Urwin, Watson Wyatt's global head of investment consulting. "In the first half pension fund balance sheets continued to strengthen, but faltering markets in the latter half largely undid these gains. Severe market events this year suggest that balance sheets will remain under pressure."

The UK had the highest allocation to equities in 2007 at 64 percent, while Switzerland had the lowest at 33 percent, said the survey.

Pension assets in the 11 largest pension markets -- Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, the Netherlands, Switzerland, UK and United States -- grew 9 percent to over $25 trillion in 2007.

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