De-risking is near the top of the agenda for pension schemes in 2012, according to benefit consultants.

In a note outlining his views on what the coming year will hold for pensions, JLT Employee Benefit Solutions chief executive Duncan Howorth said the next 12 months will see the “final nail in the defined benefit coffin”, accompanied by steady de-risking activity and growth in the prevalence of hybrid schemes.

Meanwhile, Mercer pension partner Christian Hardy characterised 2012 as a year of “threats and opportunities”.

“Given [the] immensity of the tasks of deleveraging Western economies, resolving the eurozone crisis and coping with a weak economic outlook, where markets may well continue to be spooked easily, trustees and sponsors will need to stay alert as conditions could change quickly.”

Howorth predicted the number of open DB schemes in the FTSE250 will drop below 10 per cent, driven by the risks posed by Solvency II and the high costs of operating schemes.

A desire to de-risk and take pension liabilities off the balance sheet will see a “surge” of buyout deals, Howorth said.

“I anticipate that pensions buyouts will be a key feature of the M&A landscape in 2012. At a time when The City is holding its breath for the return of the M&A market, I believe we will see more than £20bn of pension buyout deals in 2012.”

Hardy said success in volatile conditions will require speed and flexibility when changing investment strategy or taking advantage of opportunities to de-risk.

“Those trustee boards with sufficient time and resources should consider establishing rapid response sub-committees which can convene and respond swiftly to events. Those with more limited governance budgets could consider whether some of these decisions should be delegated.”

The government’s commitment to reducing regulation in relation to risk-sharing will help provide for an increase in hybrid arrangements, and Howorth called for a continuation of the political stability the pensions space has enjoyed of late.

The chief executive said he hoped for the current minister, Steve Webb, to remain in his post for at least another two years.

Jelf Employee Benefits highlighted auto-enrolment, short-service refunds, the impacts of abolishing the default retirement age and implementation of the retail distribution review as the key areas likely to make an impact this year.

Head of benefits strategy Steve Herbert said that the “blueprint” for pensions has arrived, and will have far-reaching implications for everyone involved in the industry.

“We have been bombarded by reforms and now UK Plc, SMEs and individuals have a whole new pensions’ landscape. If we cannot pull out of the current economic doldrums though, we have real concerns that the changes will have limited impact.”

Herbert said employee benefit consultants have a “serious responsibility” in helping organisations get to grips with all of the current legislation in terms of the immediate changes and keeping an eye on the future too.

“The reforms may have set a minimum benchmark to which all companies must operate – but given the economy, many organisations may not be tempted to go beyond the basic requirements unless the upside of doing so is clearly communicated.”

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