Billions shed from pension funds by plummeting equity stocks

TUMBLING equities have hammered many pension schemes this month, a group of pensions advisers announced yesterday.

An equivalent of £100bn has been added to pension deficits, with national funding levels falling by around 10 per cent in recent weeks, Bucks Consultants’ has found.

And it is not just equity markets that have hit pension funds. “Gilt yields have fallen steadily as demand for lower risk assets has risen, while maturing pension schemes seek to de-risk, further increasing scheme liabilities,” the report stated.

In a bearish note, Bucks Consultants described the collapse in equity markets early last week as “a more meaningful retrenchment and not a short-term correction.”

“Equity markets are more realistically pricing in the significant structural difficulties that still lie ahead, as economies adjust to the long term implications of the current financial crisis that began four years ago,” it said.

“Volatility and nervousness will remain elevated, even if equities bounce back.”

Nonetheless, Bucks propose that trustees “suspend planned de-risking into fixed income assets.”