• Government wants to reform Solvency II but the Prudential Regulatory Authority and the insurance industry have very different views on what should be done.  More research and consultations will take some time.

​

• Since 2011 industry expectation for life expectancy improvements have been excessive.  Actuaries think the impact of Covid is best ignored for now.  They will produce updates sometime in 2023 when 2021 census data is also available.

​

• As schemes mature and with the PPF’s cap on pension payments declared illegal, the proportion of a scheme’s savers’ pensions covered by the very well funded PPF is growing steadily as time "drifts" by.

​

• The Court ruling re the annuity sale by Prudential to Rothesay showed savers have no continuing control over who provides their pension or the investment policies pursued after a buyout.  Benefits of current ESG initiatives can be lost.

Renewal of a pension scheme – running it on with added sponsor backed security generating funds for all stakeholders is a practical possibility.  It is supported by major fiduciary and asset managers, banks and insurers.

We have developed a proposition FiduciaryPlus in close partnership with leading financial institutions.  It can make running on happen.  

UK Government has set a challenge for pension schemes to have a greater role in funding of infrastructure and in galvanising investment in new technologies.  Businesses are seen as having a poor record on pay and skills.  Companies meanwhile are making clearer, positive statements about commitment to the Environmental, Social and Governance agenda and being supportive of employees as part of Section 172 statements in accounts.  Against this background, Boards may wish to review their pension strategies.  

Many long standing UK companies have final salary defined benefit schemes.  Standard strategies are about decommissioning – derisk and transfer to life insurers – as it is seen as a complex, no upside area.

Enabling schemes to run on rather than run away can help all stakeholders.  That requires there to be insurance available against the sponsoring scheme failing to meet its obligations because of insolvency.

That insurance may be extended to cover the need for higher than expected contributions.  Schemes need a stable, long term investment strategy focussing on low risk, largely fixed income assets.  Then they can take the time to see whether the demographic trends of the last decade, which have shown little life expectancy increases, continue or if the rapid improvements actuaries presume do come about.

Short term end game strategies do current employees little good – something that could change if schemes were reactivated.  Schemes then have new rules and work on new, lower risk defined contributions bases:  As soon as it is clear that old liabilities are covered then a forward looking plan can start up using the surpluses generated over time.

For corporates looking to give substance to initiatives taken to improve employee benefits and bolster their image and brand, here is a prime opportunity.  The sums involved can be very large.  Well worth a new, more positive minded examination.
​
With products provided by major financial institutions there are specific proposals available to sponsors and trustees alike.