UK pension funds fall average 13 pct-State Street

LONDON, Jan 6 (Reuters) - British pension funds are facing average negative returns of 13 percent for 2008, preliminary data from State Street Corp (STT.N) showed on Tuesday.

It expects almost every scheme to record a negative result after a year marked by sharp falls on equity markets and volatility across asset classes. Charity funds are expected to show average losses of 19 percent for the year, it said.

The figures highlight how even traditionally conservative investors saw returns suffer in the credit crisis -- particularly those who adopted riskier strategies to boost returns.

"Those funds that have an equity bias, such as local authority schemes and many charities, will be most adversely impacted, while many of the corporate schemes, which have a relatively high commitment to bonds, will fare relatively better," State Street said.

Jeanette Patrizio, vice president of State Street Investment Analytics, said the poor performance should be viewed in the context of strong results during the bull run.

"Over the last decade, a period which includes not only the latest year but the negative returns from the fallout of the dot-com bubble, the average fund is still up more than 4 percent per annum," she said.

State Street noted that the losses estimated for UK pension funds and charity funds had been offset by the sharp decline in sterling towards the end of the year. (Reporting by Joel Dimmock; Editing by David Holmes)