Major UK companies operating defined benefit pension schemes are finding this form of retirement provision to be a liability, according to Legal & General Investment Management.
Group director of investments at Legal & General IM, David Rough, explained that companies will start to invest their DB schemes more into bonds in order to match their assets with their liabilities when implementing these schemes into company balance sheets.
He estimated that DB schemes will account for roughly an extra £15bn to be added on to company balance sheets.
“Defined benefit schemes are becoming an increasing liability for employers. With this, companies are set to turn around and say, ‘I’m not in the business of managing pension funds, I’m in the business of manufacturing’, or whatever the case may be,” said Rough.
“Managing directors are spending more time managing a company’s DB scheme than they are in managing the company.”
Rough concluded that company managing directors are going to steer their DB schemes towards low risk investment.
By Janet Du Chenne
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.