The cost of prudence to UK plc: robust protection or a missed opportunity?
This landmark report is LCP’s 30th annual Accounting for Pensions. This edition highlights a turbulent year like no other (again), with the aftermath of the Covid pandemic, the fallout from the LDI crisis, and sharp rise in gilt yields all having significant and long-lasting impacts on pension schemes.
Despite this, during the year, we have seen reductions in risk and an increase in aggregate DB pensions surplus. Given the significant market changes, this could be seen as support and backing for years of de-risking. However, it could also be seen as a missed opportunity as schemes that retained risk have generally benefitted more with greatly improved funding positions.
DB pensions in the UK now stand at a crossroads – DB pensions could be consigned to the history books as the rapid increase in insurance de-risking takes hold, or potentially could be seen as an opportunity for growth and improved outcomes delivering enhanced value for all stakeholders and wider UK plc.
- Fallout from the LDI crisis
- The impact of pensions surplus
- IAS19 assumption benchmarking
- Level of pension provision
“The past year has brought a sea change in long-term attitudes towards pensions. With improved funding positions and market innovation, pension schemes are no longer seen as a millstone weighing down corporate growth, but as an opportunity to improve outcomes and increase value for members, for scheme sponsors, and for wider stakeholders”
How we can help
Contingent funding approaches are rapidly becoming more widespread. They can be a great way to protect member benefits as well as the shareholders and other creditors of the sponsoring employer.
We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.
Whether to enter a DB Consolidator is a complex decision. Sponsors and Trustees must be sure it is the right decision for their scheme and its members. We can help.
We work with you and your finance team to ensure that your ongoing statutory duties and compliance exercises are done quickly, efficiently and accurately.
We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.