Pension funds have experienced record levels of volatility during January which is creating problems for short-term schemes seeking to settle their liabilities.

New figures have shown that funding levels for schemes have been changing by an average of £11 billion a day, reports the Press Association.

A shortfall of some £12 billion has been recorded for the 200 largest defined benefit schemes at the end of the month, the report continues.

Marcus Hurd, senior consultant and actuary at Aon Consulting, commented: “Pension schemes are long-term investors, but many cannot afford to ignore short-term pressures, which can affect business plans and destroy confidence.”

He added that investment in diversified growth funds should not be ignored as they fared better during the month with changes of just £5 billion.

Investment in such funds could have seen the 200 biggest defined benefit schemes end the month with a £6 billion surplus, the group has said.

In related news, F&C; has recently announced that “conservative” funds will be popular in the coming months due to risks created by the credit crunch.

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