UK - Some 73% of occupational pension trustees plan to reduce their allocation to equities over the next year, a Pension Corporation survey reveals.
The poll - of almost 200 trustees with aggregate liabilities of at least £50bn - also found 22% of trustees were expecting to receive company assets, such as property, in lieu of cash contributions to help fund their deficit.
It also found:
- 55% of pension fund trustees may increase sponsor contributions by more than 10% after the next valuation; 11% may do so in excess of 20%
- 44% believe switching to CPI-linked benefits is ‘unfair on pensioners'
- 47% indicated that tackling a deficit is their top priority; 31% expect to buyout
- 58% are confident of being fully funded within 10 years; 29% expect to get only the minimum PPF benefits if their sponsor becomes insolvent within five years
- LDI is the most favoured de-risking strategy under consideration (56%), then buy-ins and buyouts (33%), longevity swaps (30%) and fiduciary management (9%)
Trustees also revealed that they believed they should remunerated for their work - with 43% saying ‘yes' and 35% saying ‘no' - on the basis that the role requires increasing pensions expertise. Despite this, the overall proportion of trustees in favour of remuneration has declined compared with previous years (62% said ‘yes' in 2010).
Pension Corporation co-head of business origination David Collinson explained: "More than ever, trustees are looking to seriously tackle the deficits in their pension funds and aim to use every tool available to them, including company owned assets.
"Flexibility in how to pay off deficits should be good news for companies as they seek to retain liquid assets in a difficult economic environment, not least since there is likely to be a big increase in the amount trustees request from their sponsor after the next valuation."
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Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point