Bumpy markets: Pension schemes call for calm

Pension scheme analysts are urging trustees to keep their heads and avoid "feeding the frenzy" after global markets nosedived this week.

The FTSE fell by more than 3% yesterday, wiping £50bn off the value of the country's 100 biggest names, as fears over US and European sovereign debt spread.

London's leading index was sharply lower in Friday trading too, but has recovered marginally on publication of better-than-expected jobs data from the US.

A flight from equities has caused fears for pension funds, which are often heavily invested in the asset class.

Pension experts have warned scheme trustees not to panic their members over the crash.

Laith Khalaf, pensions analyst at Hargreaves Lansdown, said: "People invested in defined contribution pensions will have seen a pretty sharp fall in the value of their investments, but they should bear in mind pension investing is long-term and this week's events are likely to have a negligable effect."

Capita Hartshead head of marketing and communications, Louise Harris, said pension schemes must reassure members.

"The main message to communicate is that pensions are a long-term investment and members can't react to sudden dips, or rises, in the market," she said.

Harris said staff in call centres in contact with members should be well briefed on this message, but schemes should not take special measures in response to the headlines.

"If you start sending communications to members prompted by this you will just feed the frenzy," she explained.

The debt crisis has also taken its toll on annuity rates. With falling yields on ten, 15 and 30 year gilts, insurers are already cutting their rates and the GAD rate is expected to hit a two year low.