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Market turbulence wipes £250bn from pension funds

Market turbulence wipes £250bn from pension funds

Weeks of turmoil in the markets have wiped £250 billion off pension funds, heaping further pressure on private and public sector schemes.

Edi Truell, who set up specialist insurer Pension Corporation, told The Times that falling bond yields and share prices had increased the pensions shortfall raising concerns that schemes will not be able to meet long-term obligations.

‘We see time and time again that pension funds are running too many risks and when markets crash deficits balloon,’ said Truell.

‘The primary aim for the vast majority of those managing pension funds should be to not lose even more money, not try and make good previous losses or chase returns.’  

Both private and public sector schemes have been hit by trouble in the markets over past weeks.

The warning over pensions come as the Financial Times revealed high street banks have been moving billions of pounds of assets off their balance sheets and into staff pension funds.

The plan is to remove difficult to sell assets from the books while decreasing pension deficits.

HSBC made a £1.76 billion exceptional payment to its scheme including moving subordinated debt and asset-backed securities. Lloyds made a £1 billion payment to its pension fund, according to the newspaper.

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