Pension Corporation research: Trustees plan to cut equities allocation

Almost three-quarters (73%) of occupational pension trustees plan to reduce their allocation to equities in the next year, according to research by the Pension Corporation.

The Future of Pension Funds 2011 survey of trustees found that 22% expect to receive company assets, such as property, in lieu of cash contributions to help fund their deficit.

Nearly half (47%) said that tackling a deficit is their top priority, and 31% expect to buyout.

The survey also found 44% believe switching from the retail prices index (RPI) to consumer prices index (CPI) -linked benefits is unfair on pensioners, and 24% welcome the move towards CPI.

However, 51% plan to move at least some of their benefits to CPI.

Over half (55%) of respondents said they may increase sponsor contributions by more than 10% after the next valuation, and 11% may do so by more than 20%.

David Collinson, co-head of business origination at the Pension Corporation, said: “Our second annual survey of pension fund trustees has shown that more than ever, trustees are looking to seriously tackle the deficits in their pension funds and aim to use every tool available to them, including company owned assets.

“Flexibility in how to pay off deficits should be good news for companies as they seek to retain liquid assets in a difficult economic environment, not least since there is likely to be a big increase in the amount trustees request from their sponsor after the next valuation.”

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