FT : Still a DB Gold Standard Believer? Switch from Carats to Carrots

Financial Times is a fan of UK life insurers taking on DB pension schemes.  Gold Standard.  

But has the market come off the Gold Standard?  Private debt originators have muscled in and have a big interest in the sector.  What’s happening is certainly receiving plenty of global attention.  Regulators need to be on top form.  They need to ensure their rules have not created loopholes.  That £40 billion of funded reinsurance did not have the desired capital back up is not a great precedent.  Perhaps the Lex advice should be to avoid over committing to pension risk transfers for the time being.  And FT might ask if the safety net of FSCS would work if needed.  The scale and the multi jurisdictions were not there until recent years.  There is no Government guarantee.
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The carats in the Gold Standard BPA solutions seems to have reduced.  Solvency UK has eased the rules.  Switch to carrots.  Incentives are needed for schemes and life insurers to invest money in the UK economy.  Government incentives around surplus use to raise UK asset allocation are up for consultation.  Here can be a source of major economic stimulus.  No mandation needed.  Meanwhile, the life insurers should pay for the carats in their Gold Standard provided by PRA supervision and FSCS.  “Peace of mind” is a key BPA selling tool – FT’s articles may be unsettling when sponsor severance is on the journey plan.

​Further reading:  ​​  

I had, I have, I will have : A critique of the buyout journey plan

​The Rolls-Royce example : Were better outcomes available?