Rally Offers Pension Funds Breathing Space

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Byline: Alistair Graham

Soul searching and asset reallocation is expected to continue among UK pension funds this year after 2003 saw them finally gain some breathing space.At the start of last year a lot of pension schemes were in a bad way following three miserable years. By the end, through luck rather than design, markets had moved in their favour as funds took the opportunity to try and shore up their positions and close huge deficits.

The rally in 2003 also gave schemes time to consider the devastating effects of the bear market and question their investment policies. Funds have in the past relied on equities to generate high returns. For a long time it worked, enabling companies to enjoy long holidays from making contributions to their pension funds.

The onset of the bear market in 2000 changed all that. The dramatic plunge in equity values left pension funds nursing huge losses.

Mike O'Brien, managing …