Pensions News

Pension funds 'hit by credit crunch' - 16/01/2008

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A new report highlights the extent to which pension fund returns have been harmed by the ongoing credit crunch.

Moneyfacts research states that returns on pension funds were at their lowest in 2007 for five years, with the average fund posting growth of 5.41 per cent compared to an average figure of 9.17 per cent in 2006.

And both of these statistics are lower than the 19.9 per cent growth recorded in 2005, the price comparison website notes.

The most prominent "losers" were said to be property funds and Japanese funds, which saw falls of 13.6 per cent and 11.4 per cent respectively.

And UK pension funds were hit particularly hard by the credit crunch, observes Richard Eagling, editor of Investment Life & Pensions Moneyfacts.

"Only those pension savers who hold more aggressive funds investing in the far east and global emerging markets will look back at the last twelve months with any real sense of achievement," he remarks.

The Far East - except for Japan - was found to be the only lucrative area, with China's performance described as "phenomenal" and the average fund posting a 36 per cent return.

Meanwhile, The Pensions Advisory Service predicts that money purchase schemes look set to define the future of workplace pensions.

© Adfero

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