From the blog: The Pensions and Lifetime Savings Association has called for evidence to support its Defined Benefit Taskforce, as record-low gilt yields pile yet more pressure on the industry.
The taskforce, which was launched in March this year, has said it believes solutions to the challenges facing DB may lie in efficiency savings, a greater understanding of employers’ capital allocations, and addressing “binary legislative outcomes” when deciding whether a fund will enter the Pension Protection Fund.
While these are perfectly valid issues to address, naysayers might be tempted to argue that the scale of DB challenges far outreaches the scope of these criteria.
The taskforce, which was launched in March this year, has said it believes solutions to the challenges facing DB may lie in efficiency savings, a greater understanding of employers’ capital allocations, and addressing “binary legislative outcomes” when deciding whether a fund will enter the Pension Protection Fund.
While these are perfectly valid issues to address, naysayers might be tempted to argue that the scale of DB challenges far outreaches the scope of these criteria.
The UK’s population continues to age, and last week the FT told reported that 10-year gilt yields touched their lowest level since they were introduced, further frustrating DB funds’ attempts to match their liabilities.
Meanwhile, the intense scrutiny levelled at the pensions industry in the wake of the BHS and British Steel scandals risks eroding public confidence in pensions as a provision for their retirement.
Majority of MPs in all 3parties want to stay in EU. They're your democratically elected leaders. Voting Brexit overrules your own MPs
— Ros Altmann (@rosaltmann) 9 June 2016
Pensions minister Ros Altmann added to the uproar last week, prompting criticism after wading into the debate on Twitter.
“Majority of MPs in all 3parties want to stay in EU. They're your democratically elected leaders. Voting Brexit overrules your own MPs,” she tweeted, to much outrage from the online community, who reminded her that MPs serve the people, not vice versa.
DB professionals must look beyond headlines
But Joe Dabrowski, the PLSA's head of governance and investment, said trustees shouldn’t let the current slew of headlines distract them from tackling the issues at the heart of DB.
He said: “Clearly there are two high-profile schemes getting a lot of coverage at the moment, with their own different challenges.
“It would be premature to say those issues are universal but it’s clear that pension schemes are facing challenging times, and we think it’s the right time to assess and evidence what those challenges are.”
A copy of the call for evidence is available to download from the PLSA website. The call for evidence will close on July 15 2016 and responses should be sent to DBTaskforce@plsa.co.uk.
The Taskforce will present interim findings at the PLSA's annual conference in October 2016.
