Pensions - Articles - Assessing all options critical as DB funding remains stable


The UK’s 5,000 corporate defined benefit (DB) pension schemes continue to have sufficient assets on average to ‘buyout’ their pension promises, according to PwC’s Buyout Index, which recorded a surplus of £240bn in March.

 Meanwhile, PwC’s Low Reliance Index showed a near record surplus of £385bn. This index assumes schemes invest in low-risk, income-generating assets like bonds, which should mean the pension scheme is unlikely to call on the sponsor for further funding.

 As a result of sustained improvements in funding levels, sponsors and trustees are increasingly re-evaluating the preferred ‘end-game’ strategies for their pension schemes.

 John Dunn, head of pensions funding and transformation at PwC UK, said: “With funding levels of the UK’s DB schemes continuing to remain very strong, schemes have a significant opportunity to ‘lock-in’ improved funding positions to avoid a return to the world of deficits.

 “The nature of the ‘lock’ will depend on which end-game door sponsors and trustees wish to go through - for example, to buy-out, run-on, transfer to a superfund or to alternative forms of consolidation including the proposed public sector consolidator. We are therefore supportive of the Work and Pensions Committee’s recent call for schemes to understand the potential costs and benefits of the different options before locking in.”

 Alison Fleming, Chief Pensions Actuary and partner at PwC UK, added: “This mirrors the requirement from 1 April for the actuarial profession to advise their clients on the credible alternatives to particular end-game options. Pension schemes and their sponsors need to understand the benefits, cost and risks of each option as well as practical issues like timing and ease of implementation. This new requirement helps to reinforce existing actuarial standards, ensuring clients receive high quality advice in this complex area.”

 
 

Back to Index


Similar News to this Story

Wish list for the occupational pensions industry in 2025
As one year closes and another begins, it's an opportune moment to set our sights on the future. The UK occupational pensions industry faces nume
PSIG announces outcome of Consultation
The Pensions Scams Industry Group (PSIG), which was established in 2014 to help protect pension scheme members from scams, today announced the feedbac
Transfer values fell to a 12 month low during November
XPS Group’s Transfer Value Index reached a 12-month low, dropping to £151,000 during November 2024 before then recovering to its previous month-end po

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.