HL Deb 16 July 2002 vol 637 cc143-4WA
Lord Higgins

asked Her Majesty's Government:

Further to the Written Answer by Baroness Hollis of Heigham on 26 June (WA 146), whether the proportion of all pension fund assets held in equities is significantly less than 100 per cent; and, if so, whether the statement to the House on 27 May (HL Deb, col. 1040) that "what happened on the stock market … has wiped one third or so off the value of pensions funds" was wrong and misleading; and [HL4987]

What is their estimate of the average proportion of pension fund assets held in equities; and [HL4988]

Whether they are aware of any pension fund which holds all of its assets in equities. [HL4989]

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)

My statement on 27 May (HL Deb col. 1040) and subsequent Answer of 26 June (WA 146) were based on awareness that equity holdings vary between pension funds, dependent, for example, of the maturity of the fund and the investment policies being followed. But equity holdings are often substantial, ranging up to 100 per cent in some cases. Industry information on individual pension fund assets distributions can be found in the annual directory Pension Funds and their Advisers, published by AP Information Services. This includes details of 2,600 major occupational schemes. In the 2002 edition, a small minority of companies is listed in this publication as having a 100 per cent exposure to equities.

It is estimated that, on average, between 70 and 75 per cent of all pension fund assets are invested in UK and overseas equities. This is based on industry data on pension fund asset distribution collected by Russell Mellon/CAPS, covering the period 1 April 2001 to 31 March 2002. The market value of pension funds with a relatively high proportion of equity investments is more likely to follow stock market trends than the value of those with a lower proportion of equity holdings. The words used in my Answer on both 27 May and 26 June—"a third or so" and "the same general order"—were designed to offer a broad-brush assessment of the likely impact. They were clearly not intended to provide a precise quantitative estimate nor to imply that the effects of stock market falls on the value of some individual funds would equate to the impact on the value of pension funds generally.