Chancellor George Osborne today announced that ‘smoothing’ of pension scheme assets and liabilities will not be introduced for scheme funding valuations.

The issue of smoothing has been met by widespread disapproval within the pensions industry lately, with the National Association of Pension Funds (NAPF) arguing that it would “have a detrimental impact” on the funding position of a number of schemes.

Hymans Robertson partner James Mullins said: “Despite asset growth and lower volatility in financial markets in recent months, pension schemes are a long way from getting out of present difficulties. The Chancellor has seen the big picture and abandoned the idea of letting pension schemes smooth their way out of what really are difficult times.

“The UK’s recent downgrade, talk of negative interest rates and potential further rounds of QE highlight the wider economy is struggling as are many of the companies that sponsor pension schemes. Smoothing pension liabilities would potentially brush long term problems under the carpet.”

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