Recession caused 18 pct drop in 2008 global pension assets

London, Feb.5 (ANI): Nearly all countries recorded negative nominal rates of return in the first 10 months of 2008, with an average of -19 per cent reported across the OECD (Organisation for Economic Co-operation and Development), the data in the International Financial Services London 's Pension Markets report has revealed.

The total value of pension assets managed globally fell by 18 per cent to an estimated 25 trillion dollars in 2008 from 30.4 trillion dollars in 2007.

The UK return of -10 per cent was less negative due to declining exposure to equities and the falling value of sterling, which lifted the value of income on overseas investments.

The UK, with pension assets totalling 3.3 trillion dollars remained the second largest market at end-2007, accounting for 11 per cent of total assets worldwide.

UK assets are only exceeded by the dominant US market, where assets of 19.6 trillion dollars made up 64 per cent of global total in 2007.

The pensions balance for FTSE100 companies in the UK was estimated at an aggregate deficit of 40 billion pound in mid-2008.

Rising costs mean that UK private sector defined benefit (DB) schemes are increasingly being replaced by defined contribution (DC) schemes.

But contributions to DC schemes, at 9 per cent of salary, are running at less than half the 20 per cent of salary in remaining defined benefit schemes.

More people of pensionable-age in recent years have been supplementing their pension by staying in work. Employment amongst those of pension age has risen by 425,000 from 900,000 at end-2002 to 1.32 million at September-end, 2008.

Some companies have been looking to the insurance buyout market as a means of partial or full exit from their pension liabilities. The Pensions Act 2008 includes measures aimed at encouraging greater private pension saving. DB remains the dominant form of provision in the public sector.

International Financial Services London (IFSL) is a private sector organisation, with 40 years experience of successfully promoting the UK-based financial services industry throughout the world.

This report on Pension Markets is one of a series of nine titles profiling UK expertise. (ANI)