Milking and Dumping – new paper by the Pensions Institute

31 August 2016 The Pensions Institute was set up as part of the Cass Business School as the first and, as yet, only UK academic research centre to focus exclusively on pensions matters. It’s contributors have published a series of academic research papers, combined with Practitioner Reports – the latter perhaps more accessible to the non-academic. The latest report, authored by Keith Wallace 1 is titled “Milking and Dumping: The Devices Businesses use to Exploit Surpluses and Shed Deficits in Their Pension Schemes” The first part of the paper provides a historical perspective on the rise in significance of defined…

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DB Pensions – End-July 2016 PPF 7800 deficit

22 August 2016 The Pension Protection Fund produces a monthly index update (this article has data taken as at end-July 2016) of the estimated funding position of the defined benefit schemes which would be potentially eligible for entry into the Fund. It’s been a while since I last reviewed this data (my last – December 2014 – update is available here: Where did the deficit come from? – a study in scarlet (ink)) and it’s interesting to see how things have changed since then. The aggregate PPF 7800 funding ratio has declined from 82.3% at the end of 2014 to…

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DB to DC transfers – Pensions Regulator consultation

2 March 2015 The Pensions Regulator has produced a useful consultation document on DB to DC transfers and conversions and invited comments by 17 March 2015. The consultation document is pretty clear, concise and accessible and is likely to form the basis of new guidance for DB pension scheme trustees faced with the tricky question of how to handle DB members wishing to transfer to a DC scheme.     For me, there are five key areas: There should be relatively few cases where such a transfer is actually in the best interests of the member – giving up guaranteed…

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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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