17/07/2012
By Matt Ritchie
One in four trustees has had to accept a longer recovery plan while the same proportion of employers have had to pay higher contributions than expected, according to a scheme funding survey from actuarial firm Punter Southall.
The survey also found trustees and employers are increasingly focused on managing, monitoring and mitigating the risk in their pension scheme, with one in five schemes aiming to buyout by a specific date.
Punter Southall head of trustee services Adam Stanley said the survey had identified a demand for the technology to carry out real-time valuation, to complement the traditional, triennial model.
“These are tough times for both trustees and employers. Our survey shows that, now more than ever, both parties and their advisers need to be able to work together to reach pragmatic agreements.
“We found that trustees and sponsors have been adopting what you might call the ‘safety valves’ in the framework to meet this funding challenge. Both sides are willing to find solutions but the ability for employers to find the money is an obstacle both are working to overcome,” Stanley said.
In addition to longer recovery plans and increased contributions, other ‘safety valves’ employed include some element of investment outperformance being provided for in recovery plans, as done by 55 per cent of respondents.
Around one in three schemes were using contingent securities, while just over one in four made allowance for post-valuation experience when the effective date fell in particularly challenging economic circumstances.
To request a copy of the survey, visit Punter Southall’s website here
