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Market turmoil leads to less appetite for risk by pension funds, State Street global survey finds

For those employees with a defined benefit type of pension, the ride ahead looks enjoyable; for all those having a defined contribution plan the ride will be less enjoyable while those without a pension plan, start saving.

Those differences derive from the type of pension funds being offered by employers, and also the difficult challenge for that investment managers to create the benefits that have been promised.

“Pension funds are very much focused on their investment mix and changing that mix to isolate (themselves) from a few of the volatility that we have seen in the global stock markets,” said Rob Baillie, head of State Street Canada, when referring to a vital conclusion emerging from the annual survey of pension funds conducted by its Boston-based parent.

“The funds are diversifying a few of the risk away and to try and generate returns that are hopefully stronger and never correlated towards the global markets,” added Baillie, noting greater exposure to alternative investments is one approach.

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