At 30 October 2015, asset values were £639bn (representing a rise of £8bn compared to the corresponding figure of £631bn as at 30 September 2015), and liability values were £702bn, representing a rise of £6bn compared to the corresponding figure of £696bn at the same date.
“The positive trend of reducing accounting deficits since July has continued during October, albeit the position has been very volatile since the start of the year.” said Ali Tayyebi, Senior Partner in Mercer’s Retirement business. ”Notwithstanding that ongoing volatility, it is interesting to see that a steady stream of employers and pension fund trustees continue to address their risk management concerns through bulk annuity transactions, and this is borne out further by the high level of interest in Mercer’s new Pension Risk Exchange. After a slow start I would expect 2015 to end up close to the record year of 2014 where £13bn of liabilities were transferred to insurers,” continued Mr. Tayyebi.
Le Roy van Zyl, Principal in Mercer’s Financial Strategy Group, said, “October provided some respite in terms of improving markets. However, it is difficult to ignore the fact that there remain a number of scenarios that could lead to further headwinds for pension funds. For example, the economic situation in China and the emerging markets is still far from clear. Against this backdrop, companies and pension fund trustees have to have an ongoing debate on how they can best work together to ensure prudent financial management without taking short-termist actions they are likely to regret in future. A key tool to achieve this is to set up a
Joint Working Group – something a number of our clients are finding very valuable.”
Mercer’s data relates to about 50% of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts. Other measures are also relevant for trustees and employers considering their risk exposure. But data published by the Pensions Regulator and elsewhere tells a similar story.
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