UK - Only 15% of pension schemes have 50% or more inflation-linked assets matching their liabilities, suggesting most are structurally underhedged, research shows.
Research among 44 actuaries working in pensions, carried out by Redington and Pension Corporation, also revealed the proportion of matching assets relative to liabilities in these schemes was between 25% and 35% meaning that they were, in effect, structurally underhedged.
However, it also found 75% of respondents said their schemes would likely or almost certainly carry out a buyout or buy-in in the next three years, while 80% would likely or almost certainly conduct a liability management exercise of some description.
Redington founder and co-chief executive Robert Gardner (pictured) said: "The switch in statutory indexation of RPI to CPI has impacted schemes looking to de-risk, but, as the first set of our survey results show, pensions schemes can do a significant amount of first order inflation de-risking using RPI before they need to worry about the secondary order RPI/CPI basis risk."
PIC co-head of business origination Jay Shah added: "Pension schemes are continuing to take big risks of inflation eroding away investment returns and funding positions deteriorating."
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.