UK defined benefit (DB) schemes have almost halved their equity exposure over the last decade while increasing gilts and fixed interest by almost two-thirds, according to data.
The 10th edition of the Purple Book, published jointly by the Pension Protection Fund (PPF) and The Pensions Regulator (TPR), found schemes reduced their equity share of total assets from 61.1% in 2006 to 33% in 2015.
Meanwhile, the share of gilt and fixed income assets rose from 28.3% to 47.7% while holdings of other asset classes rose from 10.6% to 19.3%.
Investment in UK equities almost halved between 2008 and 2015, falling from 48% to 25.6%, while overseas investment rose from 51.6% to 65.4%.
The study also found a rise in alternative investment, with hedge fund allocations rising from 1.5% in 2009 to 6.1% in 2015.
The data, based on information from the 5,945 schemes eligible for entry into the PPF, said the percentage of schemes open to new members fell from 43% in 2006 to 13% in 2015.
However, the PPF said there has been a levelling-off of scheme closures this year as active memberships fell by 3.4% from 2014, the smallest drop since the Purple Book’s launch.
Elsewhere, around one-in-10 (13%) schemes is open to new members and a further 51% continue to accrue benefits for existing members.
PPF chief financial officer Andrew McKinnon said: “The Purple Book shows that the UK’s DB pension landscape has seen seismic shifts over the past decade and highlights the necessity of effective risk management. It is more important than ever that the PPF exists to ensure that members, of schemes that really are unable to pay what they promised, don’t end up without any pension at all.”
TPR executive director Andrew Warwick-Thompson said: “This year’s Purple Book marks a significant moment. After a decade of dramatic decline, the DB landscape has reached a point of relative stability in terms of scheme status and membership. However the impact of new pension freedoms will not be seen until next year’s Purple Book, and may yet shift the landscape again.
“We have entered a new phase and we call upon trustees and employers to work together to agree their long-term aims, and the best way to secure their members’ benefits. We are committed to exploring credible new ideas with the pensions industry, and to working with sponsors and trustees to secure sustainable schemes that deliver good member outcomes over the decades to come.”
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