UK: In the Face of De-Risking Pressure

The National Association of Pension Funds (NAPF) has called for more long-dated and inflation-protected gilts to help them hedge against increasing life expectancy.

Representing $1.3 trillion in investments, the NAPF submitted the request for more long-dated gilts to the UK Treasury ahead of the 2011  Budget, which is set to be released later this month, the Financial Times reported. The request from the association comes as UK pensions are under increasing pressure to de-risk their investments and buy safe assets that match their liabilities in the aftermath of the economic downturn.

Data compiled by the firm shows that over the past 10 years, pension scheme allocations to fixed-income and index-linked securities have risen from 16% of scheme assets to more than 30%, the FT reported. Furthermore, the group's research shows that UK pension funds own more than $162 billion of gilt holdings and account for a major proportion of the insurance sector’s gilt holdings of more than $275 billion.

 ai-cio