UK - Jardine Lloyd Thompson (JLT) has backed a Bacon & Woodrow report claiming that an increasing number of companies are suffering from pension scheme underfunding.
JLT attributes this underfunding to poor investment returns and extended longevity adding that these problems are compounded by the minimum funding requirement (MFR).
June McIntosh, technical director at Jardine Lloyd Thompson Employee Benefits, said: “Many small and medium sized employers have been feeling the MFR impact for some time and the recent Bacon & Woodrow survey now suggests that the larger companies, with more established pension funds, are now under similar pressure.
“We urge the Government to use its powers to amend the detailed regulations of MFR in order to relieve the burden on businesses, for example by extending the funding shortfall recovery period and /or by putting in a temporary fix to correct the effects of the flaw in the basis.
“If the principle that MFR is flawed is accepted, there is no need to continue to place this burden on companies. The principles of member security can be maintained whilst relaxing some of the MFR regulations.”
The National Association of Pension Funds (NAPF) has again called for rational and informed debate about the future of pension provision in the UK, in the light of a series of reports published this week.
NAPF director general, David Cranston, said: “In recent months, the NAPF has raised important questions about the affordability of the existing retirement provision structure; the balance between full time work and retirement, and the need for greater flexibility during a period of transition from paid employment to retirement income.
“We think there is every reason to believe these issues can be dealt with intelligently, and that pensions – especially employer sponsored pensions – will continue to provide a healthy and sustainable source of retirement income for millions of people.”
By Janet Du Chenne
Life expectancy in the UK saw no improvement between 2015 and 2017 as the number of people aged over 90 hit a record high, latest Office for National Statistics (ONS) data reveals.
Self-administered pension funds spent £14bn on payments to pensioners in Q2 2018, but only received £11.4bn of contributions (net of refunds), latest Office for National Statistics (ONS) data reveals.
The Pensions and Lifetime Savings Association (PLSA) has named the 17 members of its inaugural policy board after a competitive application process with 60 candidates.