More than 60% of U.K. plan sponsors plan "significant" asset allocation changes over the next three years, and another 12% plan to increase their hedge fund allocations in the next 12 months, according to a Greenwich Associates report. Most British corporate pension funds had 63% in equities as of Dec. 31, down from 73% in 1999, and 28% in bonds, up from 19% in 1999. Greenwich analysts expect fixed-income investments to top 30% over the next three years "if plan sponsors follow through on their plans for future shifts," according to the report.
Also, 47% of corporate defined benefit plans in Britain were closed to new employees this year, up from 42% in 2003. Although the shift indicates that more companies are offering defined contribution plans, the report also noted that 98% of U.K. pension assets remain in defined benefit plans.
"U.K. plan sponsors report that they expect to hold 84% of their assets in defined benefit plans in 10 years time," Greenwich Associates consultant Chris McNickle said in the report "No matter how rapidly U.K. sponsors close their final-salary plans to new employees, in all likelihood they will retain responsibility for current employees already covered by these plans for at least the next 25 to 30 years."
