The average FTSE 100 firm’s defined benefits pension scheme saw its asset allocation to bonds increase from 56% to 59% in the year to September 30, 2015, according to recent research by Jardine Lloyd Thompson (JLT) Employee Benefits.

Six years ago, average FTSE 100 firm pension allocation to bonds — typically government and company debt securities — was only 49%.

Government and company debt securities are deemed by many pension fund managers to be less risky than shares.

JLT said the bond allocation of FTSE 100 defined benefits pension schemes rose by £25 billion to a record £315 billion in the year to September 30, 2015.

This increased allocation was “mainly driven by investment returns rather than new money allocated to bonds” said JLT.

“A few companies reported very significant individual changes to investment strategies, with 11 FTSE 100 companies seeing their bond allocations altered by more than 10%,” said JLT.

“A total of 59 FTSE 100 companies have more than 50% of pension scheme assets in bonds.”

JLT said Direct Line Insurance had 96% in bonds, Rolls-Royce had 92%, Prudential had 88%, Land Securities had 82% and Barratt Developments had 75%.

Charles Cowling, director, JLT Employee Benefits, said: “The level of schemes’ bond holdings has reached a record high, which is good news in terms of lowered investment risks.

“It could also reflect greater prudence in trustees’ approach to risk management generally, which is very positive particularly as large deficits could tempt pension schemes to invest in higher growth, higher risk investments to make up for the shortfall.

“Despite some market commentators warning about bond overvaluation, the fact that pension bond holdings are at historical highs doesn’t seem to evidence it.

“But, whilst it is encouraging to see heightened cautiousness among pension schemes, greater bond holdings will likely put more pressure on companies to fund pension scheme deficits through cash contributions.

“Some pension schemes’ allocation to equities (shares) are surprisingly high, although the information publicly available in their accounts does not reveal the rationale for their investment strategies.

“Indeed the published reports reveal little detail of the significant activity there has been by many companies and trustees to use LDI (liability-driven investment) strategies to reduce investment risk.

“However while it is good to see evidence of pension schemes reducing investment risk, there is still a long way to go before the very significant risks still being run in pension schemes will cease to worry shareholders and pension scheme members alike.”