UK - Wholesale swapping into long dated sterling bonds in an effort to plug deficits is not the silver bullet for defined benefits UK pension schemes due to a shortage in supply, according to KMPG research.
The KMPG investing consulting team said the idea of pension funds transferring investments out of equities into sterling long-dated bonds to reduce their risk profile was "fundamentally flawed".
The study showed the likely demand for sterling long-dated bonds from the UK pensions fund industry under this theory would outstrip supply by as much as four times.
Patrick McCoy, head of investment consulting at KPMG in the UK, said: “There is a widely held belief that, if pension funds reach the point where the value of their equity holdings increase to cover their deficits, they will swap out of equities into bonds. Our research shows clearly that this will not be possible as the supply cannot meet demand.”
According to McCoy, pension funds will have to look at alternative investment strategies focused on more diversified portfolios or use complex financial instruments to solve their conundrum.
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.