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| UK pension funds hit by share dip | UK pension funds hit by share dip |
| (about 1 hour later) | |
| UK pension funds have lost billions of pounds after stock markets tumbled amid credit crunch fears, reports suggest. | |
| According to actuaries Aon Consulting, the UK's 200 biggest final salary pension schemes had a deficit of £26bn at the end of trading on Thursday. | According to actuaries Aon Consulting, the UK's 200 biggest final salary pension schemes had a deficit of £26bn at the end of trading on Thursday. |
| And consultants Lane, Clark & Peacock (LCP) estimate that companies listed on the FTSE 100 stock index in London have a pensions shortfall of about £15bn. | |
| That compares with surpluses of between £9bn and £12bn in July, the firms said. | |
| Longer term | Longer term |
| The worry for many analysts is that stock market declines will continue, wiping even more money off the value of pension funds and global stock markets. | |
| However, Aon said that investors should not over-react to the decline in pension fund values. | However, Aon said that investors should not over-react to the decline in pension fund values. |
| Marcus Hurd, a senior consultant and actuary at Aon, urged investors to take a longer-term view, pointing out that at the start of 2007 the pension funds had a deficit of £40bn, while a year earlier it was more than £80bn. | Marcus Hurd, a senior consultant and actuary at Aon, urged investors to take a longer-term view, pointing out that at the start of 2007 the pension funds had a deficit of £40bn, while a year earlier it was more than £80bn. |
| "People shouldn't get too concerned about one week of falls," he said. | "People shouldn't get too concerned about one week of falls," he said. |
| Even so, people who are close to retirement and not on a guaranteed benefit pension could feel the pinch as they do not have time to ride out the market volatility and make back losses, he explained. | |
| Bob Scott, a partner at LCP, said that while the shift from surplus to deficit was significant, it was not "a case of the world ending". | |
| And if anything, the current problems could act as a reminder for pension fund managers and trustees about the dangers that are inherent in investing too heavily in equities, he said. | |
| Market wobbles | |
| The recent slump in share prices was triggered by problems in the US mortgage market. | The recent slump in share prices was triggered by problems in the US mortgage market. |
| On Thursday, the UK's FTSE 100 index fell 4.1%, its worst session in more than four years. | On Thursday, the UK's FTSE 100 index fell 4.1%, its worst session in more than four years. |
| Asian markets had heavy losses on Friday, and European markets had a shaky morning in trading. | |
| At midday market indexes in London, Paris and Frankfurt were all in negative territory. |