After a bumper year in 2009, pension funds have had a sluggish start to 2010, with the average fund making a loss of 1.98% in January of this year. This is due to falls in the stock market, according to website Moneyfacts.co.uk. Much of the growth in stock markets and pension funds in 2009 was driven by well performing high risk stocks. However, so far this year these have been falling, having the knock-on effect of shrinking the value of pension funds.
However it has not all been doom and gloom, January was a remarkably buoyant month for bond and fixed interest funds. Some of the highlights include an increase in value of Sterling Corporate Bonds by 2.8%, an increase of 2.5% in Sterling High Yield and a 2.3% increase in Sterling Other Fixed Interest. The fall in the value of pension funds was confirmed when data released by Aon Consulting showed that the UK’s defined contribution pension scheme members endured seeing the overall value of their combined assets and projected retirement incomes fall heavily. At the end of last year their total value was £526 billion whereas now their value is just £509 billion. With asset values falling, pension experts are advising that those with money in a DC scheme should remain as “active as possible” when presiding over where their money is invested.
These latest figures are disappointing given how well pension funds did in 2009. Many will be hoping that the start of this year is merely an aberration and that the stock market will get back on track soon so that pension funds can start growing again.
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