We have partnered with the Pensions Policy Institute on a project to bring together the latest data on the state of private sector Defined Benefit (DB) pensions in the UK, and to consider the problems and opportunities facing DB pension schemes.
The research was conducted by the Pensions Policy Institute and supported by a series of roundtables, with a wide range of representatives from Government and industry, to ensure a broad range of views and concerns was reflected. Despite the variety of views raised during the roundtables, there was broad consensus of the value DB schemes provide to members and the costs and risks this has imposed on employers.
The research is very timely as it provides background to many of the questions raised in the government’s Green Paper, “Security and Sustainability in Defined Benefit Pension Schemes”.
The first paper describes the trajectory taken by occupational pension provision over the past 50 years. It explores the complex set of reasons behind the decline in DB provision and the challenges facing sponsors, trustees, government, regulators and members.
The second paper looks at trusteeship, reflecting on the role played by trustees in ensuring that schemes are well run and, as far as is possible, deliver in full the benefits accrued to members.
The third paper explores the subject of DB liabilities. It examines the size, trend and shape of UK DB scheme liabilities and looks at the plethora of methods used to measure DB liabilities. It also considers the particular impact of bond yields and longevity trends on pension scheme liabilities, plus the options available for controlling and de-risking liabilities.
The last paper discusses the challenges and opportunities trustees face when managing scheme assets and investment strategy. It considers the scale and growth of DB scheme assets, how asset allocation has changed and the factors which are influencing DB scheme investment strategy. It also looks at how investment trends may evolve over the coming years.