Where did the deficit come from? – a study in scarlet (ink)

20 January 2015 According to Pension Protection Fund (PPF) data1, the s.179 funding level for the aggregate universe of DB schemes potentially eligible for entry into the PPF fell sharply during 2014. According to their database, the aggregate funding position moved from a small surplus (0.8% at Dec 13) to a significant deficit (-17.7% at Dec 14). So where did all this red ink2 come from? Well … conventional growth assets may not have helped much. Trustees will be familiar with the roll-forward phenomenon on actuarial valuations; that the selected discount rate becomes a sort of ‘hurdle rate’ going forward…

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