Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson, says: “If we could be granted three wishes for the year ahead, my first would be for the Pensions Minister, Emma Reynolds, to make it easier for Defined Benefit (DB) pension schemes to deliver more. At over £1trn it’s too big to economically ignore. By making surplus sharing easier, the government could unlock tens of billions of pounds in extra productive finance to help grow the UK economy, whilst improving pensions too.
“My second wish is for a commitment to clear pathways to adequate pensions for employers, employees, and the self-employed. This is a big job as adequacy must be considered, as part of plans for the state pension and means tested benefits.
“Finally, my third wish. I hope that this year will bring an industry and government push to reenergise collective savings. This could be through the next generation of CDC designs, via decumulation solutions that pool risk. It could also be achieved through more conditional flexibility in DB benefits that can be offered to help current and future open DB schemes to thrive. The overarching goal is that we need to harness the power of the collective to deliver better pensions for any given spend.”
Elaine Torry, Co-Head of Trustee DB Investment, Hymans Robertson, says: “Our big hope for this year is that trustees of UK DB pension schemes don’t rest on their laurels. Instead, we’d like to see trustees in this position proactively consider the evolving roles of their protection and growth assets, and how these could affect the long-term success of their schemes.
“In particular, some of the areas we would like to see trustees get on their agendas for 2025 include revisiting the diversification within their credit and equity allocations. Also, setting some time aside to ensure collateral assets are working efficiently, would be an exercise well worth doing.
“Overall, though, we would encourage trustees to recognise that a strong, and in many cases a surplus, funding position requires just as much careful management as a weak funding position with a meaningful deficit. Therefore, ensuring investment of schemes’ assets are assessed through a ‘rewarded risk’ rather than just a ‘risk’ lens should be an important consideration for trustees and their advisors over the coming 12 months.”
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