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| Version 1 | Version 2 |
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| UK pension funds hit by share dip | UK pension funds hit by share dip |
| (about 5 hours later) | |
| UK pension funds have lost billions of pounds after stock markets tumbled amid credit crunch fears, reports suggest. | 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. | 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. | That compares with surpluses of between £9bn and £12bn in July, the firms said. |
| The recent worldwide slump in share prices was triggered by problems in the US mortgage market. | |
| The worry for many analysts is that stock market declines will resume next week, wiping even more money off the value of pension funds and global stock markets. | |
| Longer term | Longer term |
| Markets staged a recovery on Friday after the US Federal Reserve cut its primary discount rate, with the UK's FTSE 100 closing 3.5% up on the day. | |
| The previous day, it had fallen 4.1%, its worst session in more than four years. | |
| Analysts said there was no guarantee that Friday's upward trend would be maintained when trading resumed after the weekend. | |
| Despite the uncertainty, Aon said that investors should not overreact 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. | 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". | 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. | 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. |