Boots leads the way by selling all equity holdings.
Volatile stock markets and tough new accounting standards are the reason the Boots pharmacy chain has decided to move its entire £2.3 billion fund out of shares and into bonds. That move leaves industry experts wondering whether other pension fund trustees will do likewise.
Boots is the first large U.K. company to comply with a new accounting standard, FRS17. The new rules, which will be compulsory by 2003, force companies to display mismatches between pension assets and liabilities on their balance sheets.
Boots has switched to bonds as a means of reducing volatility on its balance sheet. However, it had other reasons for making the change. Investment management costs for the 72,000-member pension scheme are expected to drop from £10 million to £250,000.
Boots is the first large U.K. company to comply with a new accounting standard, FRS17. The new rules, which will be compulsory by 2003, force companies to display mismatches between pension assets and liabilities on their balance sheets.
Boots has switched to bonds as a means of reducing volatility on its balance sheet. However, it had other reasons for making the change. Investment management costs for the 72,000-member pension scheme are expected to drop from £10 million to £250,000.
