Share price slump 'bad news for pensions'

Share price slump ‘bad news for pensions’

30 January 2008 / by None
Investors should be aware that the drop in share prices could have a detrimental effect on pension schemes, experts say.

Figures from pensions expert Aon Consulting have shown that last Monday’s fall cost the top 200 companies’ pension funds some £15 billion, reports the Money Observer.

The fall in the stock market and the increase in deficits will result in companies being reluctant to continue with final-salary schemes, says the report.

Many schemes of this type have been closed to new members with some companies putting a hold on contributions from existing members too.

Deborah Cooper, principle at consulting actuaries Mercer, feels that while this may not be a “final-straw” situation, it could well be problematic in the future.

She commented: “There are a lot of employers who have closed schemes to new entrants and it might make them think about their strategy.”

In related news, the Personal Accounts Delivery Authority has revealed that the charging system for what could be the UK’s biggest pension scheme is under scrutiny.

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Written by Editorial Team