Archive for April 2015

Neil Buchanan

In addition to various sporting celebrities, now unemployed Top Gear presenters and several car manufacturers, I also “follow” a few notable people on Twitter, one of which is the Chancellor of the Exchequer, George Osborne.

On the date of writing this blog, George Osborne tweeted “Our plan for working people gets another boost today with good news for family budgets – Inflation at zero for a second month in a row”. Remembering that this is election time and politicians are doing everything possible to endear themselves to the public (roll out the usual baby photos and visits to schools), the first half of this tweet has been written to do exactly this. I do however have some scepticism about inflationary figures being quoted as it is unlikely that my unique “basket of goods” will stack up with those components which are used to determine CPI.  (It would be quite an achievement if it did, as most of the time I don’t know what I am going to put in my shopping trolley until I am walking up and down the various isles of my chosen supermarket!) Read more »

Gillian Lister

Spence & Partners, the UK pensions actuaries and administration specialists, today announced their appointment by the Hayman Limited Retirement Benefits Scheme for their fully integrated DB scheme management service.

Wealth management and employee benefits group Mattioli Woods plc, has been advising the trustees since 2009 and recommended the appointment of Spence. Mattioli Woods understands that trustees need to develop an integrated strategy to manage their DB pension scheme and members of their employee benefit team are experts in providing guidance in this area. Mattioli Woods provides consultancy and investment services to the scheme and has partnered with Spence to deliver actuarial and administration services. Read more »

Alan Collins

Spence & Partners latest blog for Pension Funds Online –

The number of firms offering daily valuation tools has risen significantly in the last 12 months and many pension scheme trustees now have access to real time updates of their funding position.

This is a step change from the days when accurate figures were available once every three years, fifteen months after the effective valuation date, with an approximate roll forward provided once a year between valuations.

Whilst each consultancy firm extols the particular virtues of their system, is it time to take a step back and ask whether trustees are actually getting the most they can out of their spend on these tools? Read more »

Gillian Lister

Last month I had the pleasure of attending a session with Charles Stanley Pan Asset, for a seminar entitled “Can pension schemes cut risk and cost without sacrificing investment performance”.  The slots were covered by two speakers, John Redwood of Charles Stanley Pan Asset and our very own Alan Collins, Director & Head of Trustee Advisory Services.

What struck me at the sessions was the challenges ahead for Trustees of Defined Benefit (DB) Schemes in relation to funding, investment risk and cost.  However, thankfully, I did see a potential light at the end of the tunnel.

What we’re dealing with now

Interest rates have fallen significantly over the past year.  For schemes with un-hedged investments, funding levels will have plummeted.  Similarly, inflation is low and schemes with fixed increases and un-hedged investments will be hit hardest.

The number of DB schemes in deficit on a S179 basis averaged 1,500 in January 2007 rising to over 4,000 at the peak of the credit crunch in 2009. The current estimate for 2015 is well over 5,000!  Surely this trend can’t continue…..can we let it? Read more »

Andrew Kitchen

Having witnessed strong returns on assets over the last 12 months, many scheme sponsors could be, optimistically, looking forward to reporting improved balance sheet positions in 2015. Unfortunately, record low bond yields are likely to have more than offset these gains for most schemes due to their effect on liability valuations. Pension costs charged through the P&L will continue to rise, with further increased charges likely next year as a result of forthcoming changes in pensions accounting standards.

In this Spence Special Report on Pensions Accounting, we describe the asset/liability balancing act in light of market movements over the past year. To help draw attention to the practical implications, the effect on a typical scheme is illustrated.

We also review recent developments in the arena of pensions accounting, highlighting issues that may be of interest.

Click here to download your Pensions Accounting Update.

John McManus

A brief look at how considering the risk characteristics of liabilities in the asset allocation process can assist in controlling scheme risks and help achieve objectives.

The key objective of any defined pension scheme is to provide the promised scheme benefits as they become due.  This is also the key funding objective of trustees as set out in the Pensions Regulator’s Code of Practice.

To meet this objective, the scheme liabilities must be backed by sufficient scheme assets.  The objective can be funded by contributions but also by investment returns.   Clearly, assets and liabilities are connected in achieving this goal.  However, in the past they have not always been considered together when allocating the assets of the scheme.  Static asset allocation seems to be an established approach but is this appropriate, and is there an alternative? Read more »

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