What is your pension fund's exposure to the Greek debt crisis?

by Ian Cowie

Daily Telegraph
November 2, 2011

Pension funds are most people’s biggest investment outside their home and many savers may be wondering how much they will lose as a result of the Greek debt crisis. Dozens of funds turned out to have exposure to busted banks in Iceland – including 120 local authorities which had a total of £1bn frozen, although most of that has now been recovered.

But questions remain about British pension funds’ investment in Greek bonds, which may now be redeemed at only 50p in the pound. Even that ‘haircut’ or loss of half investors’ capital is now subject to a referendum and rising fears about fundamental flaws in Greece’s fiscal stability.

So I asked Joanne Segars, chief executive of the National Association of Pension Funds – whose members manage nearly £800bn on behalf of 15m savers – how our retirement plans may be affected by the current crisis. She said: “It’s understandable if the financial shocks running through the Greek economy have left many British savers wondering if their pensions will be be hit too.

“Fortunately, UK pension funds have a very low exposure to Greek bonds, which are only a tiny part of a much bigger investment picture. Overseas bonds make up around 4pc of UK final salary pension funds, and Greece will be a small fraction of that – some estimates say they account for only 0.3pc of the global bond market.

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