Pensions - Articles - BlackRock comment on June 2020 figures of the PPF7800 Index

 Global equities rose 3% in June, with optimistic market sentiment driven by the rate of new COVID-19 infections remaining low, despite the easing of lockdowns. However, rising longer term inflation expectations led to increased pension scheme liabilities. With both assets and liabilities increasing marginally in June, the PPF 7800 index now stands at 91.0%, up 0.1% over the month.

 Global equities are more or less back to where they were at the start of the year, although the UK lags significantly behind – a reflection of the industrial profile of its economy. UK GDP is set to be significantly lower at the end of 2020 than it was at the start, with the likelihood of a no, or limited, Brexit deal creating extra economic uncertainty as we look ahead to 2021. The Bank of England is set to continue its accommodative approach and we can expect to see a flat yield curve and low interest rates for some time.

 The average pension scheme still has a way to go to get back to the funding levels seen at the end of 2019. That said, there is much variation around this and schemes which have a fiduciary manager have typically fared much better. The first half of this year has emphasised the need to be agile to navigate market movements during periods of volatility. No doubt this has contributed to the surge of pension schemes considering using a fiduciary manager as they reassess their investment strategies, objectives and governance models.