UK - Rising longevity has been causing headaches for large companies with defined benefits (DB) pension plans, according to a survey by Watson Wyatt.
Some 60% of the senior finance officers, treasury and pensions executives polled said they were ‘concerned’ about the effect of longevity risks on their pension schemes and had taken steps to offset them, or were considering doing so in the future.
Steven Dicker, senior consultant, Watson Wyatt, said: “Unanticipated increases in life expectancy can represent a significant unhedged risk for pension schemes.”
According to the results of the survey, 25% of funds have taken steps to control longevity risk, 25% are considering hedging and 8% intend to hedge or buy out.
Volatility connected to pension fund risk had an adverse effect on share prices in the opinion of 30% of respondents.
Enhanced powers for The Pensions Regulator (TPR) to prosecute and fine company directors who "wilfully or recklessly" put their defined benefit (DB) pension scheme at risk will be hard to enforce, commentators say.
Melrose has pledged to contribute up to £1bn to GKN's pension schemes as part of a final offer to acquire the engineering business.
Existing master trusts will be forced to pay £41,000 when applying for authorisation under the upcoming regime, the government has confirmed.
UPDATE 2 - DWP publishes DB white paper: Stronger powers for TPR, DB chair statements to be introduced
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government has confirmed.