Equities shelter SHPS from dark clouds in Tokyo
The Social Housing Pension Scheme and local government schemes weathered the storm that engulfed the rest of the pensions sector after returns from government bonds dropped to their lowest level in half a century last week.
Panic buying of government bonds, or gilts, following the enforced closure of the Tokyo stock exchange meant that yields from the bonds dropped as demand soared.
However, Steven Nicholls, deputy chief executive of the Pensions Trust, which runs SHPS, said the scheme was in a good position compared with some in the corporate sector because it had invested heavily in equities.
Even though returns on bonds had dropped, the value of the bonds themselves had gone up. He added that current returns on bonds were less important as many people in the scheme were young and not yet claiming their pension.
Graeme Muir, principal at actuaries Punter Southall, said the investment of local government schemes had performed better than expected last year and this would cancel out increased liabilities due to lower bond yields in many cases.