Mature schemes must have a strategy in place to ensure they sell their assets in the most efficient way possible.
Speaking at a trustee event this morning Punter Southall Investment Consulting's managing director Danny Vassiliades (pictured) said schemes should not be scared to sell assets as their income needs increase.
He argued that de-risking for such schemes becomes more about effective disposal of assets as it is about protecting funding levels. He added that in a perfect world the final pension payment would take assets in the scheme to zero as they would have all been disinvested in a timely manner.
"It seems to me that the most important risk for the disinvestor is the moment at which they sell the asset as it is a one off decision," he said. "They need to have a process in place to sell their assets as it is not enough to come to the next payroll and disinvest just enough to cover that payment. Such an approach makes the disinvestor hostage to fortune and could see them selling in poor market conditions -they would be better off having a process whereby they sell off a reasonable chunk of assets at particular times."
He continued: "Schemes should not be afraid of doing this. As time goes on investment risk becomes dwarfed by longevity risk and that is where annuities come in. Trustees need to be courageous about the decisions they make. There is no point if the FTSE were to hit 7500 and schemes were sitting back and saying they have made the right decision and then do nothing about it. At its essence the only important thing is the price you paid for those assets and the price you sold them for. Anything else is just noise."
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