One Sentence Can Be Transformational for Pension Funding and The Stock Market

“The Government encourage sound sponsors and trustees of well financed DB schemes to run on and modernise them to be ESG Flagships in all stakeholders’ interests.”
 
That is the C-Suite recommended line responding to DWP / Treasury’s Call for Evidence on DB schemes.
 
The consequences are:
 

• Many pension issues self-correct and asset allocations change to include more productive assets.
• Running on long term with stable return targets brings reworking of asset allocations so they are more closely aligned to Government investment growth objectives.
• Time for surpluses to emerge and for them to be reinvested in all stakeholders’ interests, particularly those of past and present employees.
• More money invested for longer will be a major boost for UK Stock Market.
• Trustees have new, forward-looking purposes and will attract more engaged, diverse members.
• Trustees / sponsors can agree on use of discretionary powers to address maintaining real, not just nominal, pension levels in inflationary times and surpluses can be distributed between past and present employees, sponsors and tax authorities.
• (C)DC modernised tiers within schemes will link the schemes’ past to its future.
• Overheating life insurance annuitisation market will find a sustainable level.

 
Replace the Death Wish Statement of Investment Principles with a positive objective of running on for good.

​The Death Wish SIP is the source of the downward spiral in DB schemes’ investment returns.  Replace it with Run On For Good.  Go for stable, long term, higher productive asset allocations.  No severance and as needed surety bonds provide safety nets.  The sponsors and trustees have ESG flagships.  The objective is to improve the pensions of past and present employees at little or no cost to the sponsor.  The technology is available.

An ESG Flagship - Take a Look Around for your Pension Scheme