Expert advice for pension trustees
There are going to be some difficult meetings for pension trustees this spring - it is likely they will have to review some dreadful performance numbers.
By John Redwood
Last Updated: 11:44AM GMT 24 Feb 2009

Many pension funds will have lost more than a fifth of their value and some as much as a third, depending on how heavily invested they have been in equities and property. A £10m fund may be down £2.5m, and a £100m fund may have lost more than £20m.

The Trustees will have to decide what to do, and how to tell the members the bad news. Members and trustees will be angry or upset that despite all the advice the funds are paying for they can end up in such a bind.

The Actuaries will point out how there is now a bigger hole in the pension fund. They may permit themselves the luxury of explaining that over the last year, (uncharacteristically), if the fund had been more fully invested in government bonds it would have done a lot better. Unfortunately, you cannot be sure of paying rising pensions which go up with increased life spans and with wage inflation, out of fixed income bonds.

Some schemes that were previously in surplus have now moved to deficit

The schemes value fell from 1,868million to 1,803million at end of March 2008. By December 2008 the value has fallen to 1,530million and the scheme has now moved into deficit

arjay wrote:My understanding is that pensions nowadays are kept separate and in effect ring-fenced. I hope.

arjay wrote:Westerby, I would think they mean his pension fund value has fallen, which yes if he were to take (buy) his pension now or in the near future, would mean he would get less.