UK - Companies are failing to minimise the financial impact of their pension schemes despite being aware of the risks involved, Deloitte & Touche claims.
A survey of 171 UK companies carried out by the accountant found that 70% of respondents had changed their strategy to tackle pension risk over the last three years. But a quarter were unsure of the results of the changes.
It said that while 63% of firms which had made changes had opted to close their DB schemes to new entrants, almost two-thirds had done so because they wrongly believed they had successfully mitigated the financial risks.
Partner Orlando Harvey Wood said: “The spiralling costs of providing DB pensions and the FRS17 disclosure requirements have led many firms to close their DB schemes to new entrants.
“But given the long run-off time of current pension liabilities, this policy will only lead to limited risk reduction for most in the short-term.
“Indeed, the closure of a defined benefit scheme often has the effect of increasing the employer’s cash contribution rate.”
The survey also found that although 80% of companies questioned had a business risk management policy, only half had included pensions in the remit, while 28% of respondents did not integrate pension cash costs into financial planning models.
The Pensions Regulator (TPR) has granted 11 master trusts extensions to apply for authorisation, as it confirms it has received 22 applications ahead of the 31 March deadline.
Aegon Master Trust, Fidelity Master Trust and Ensign have sent off their authorisation applications to The Pensions Regulator (TPR).
Self-administered pension funds spent £15bn on payments to pensioners in Q4 2018, but received just £12bn in contributions (net of refunds), Office for National Statistics (ONS) data reveals.
Aberdeen Standard Investments (ASI) and Gresham House are to team up to form a joint venture.