UK Pensions Up 17% in '03

January 8, 2004 ( - Pension funds in the United Kingdom were up 16.8% in 2003, amplified by a strong euro during the year.

Pension returns across the pond returned to the black ink for the first time in four years after plunging equity markets had left some pension funds deep in the red.   Helping to get UK funds back on the winning side was the 30.4% gain in Pacific basin shares, 28.4% return in European equities, 21.2% improvement in UK equities and 20.1% return of Japanese shares, according to data provided by WM Data, cited in a Reuters report.

While impressive in its own right, US equity gains were only 16.2% in a year that saw a greater allocation of UK funds to this asset class.   Pension administrators in the UK shifted 8% of their total portfolios to US equities from just 7% at the start of the year.   The move came as British pension funds took money out of domestic stocks.

Also gaining a larger piece of the UK pension pie were UK domestic bonds, as p ension funds pulled around 2 billion pounds from overseas bond portfolios and shifted into UK bonds, seen as a good proxy for their liability streams.  UK and overseas bonds returned around 3.6% with index-linked bonds delivering 6.7%.

In the end though, the overall value of the bond portfolio fell due to the strong performance of equity markets.   Bond assets slipped to around 22.5% of assets from 26.5%.