UK - UK pension schemes are still failing to match their assets against liabilities, according to research by Redington and Pension Corporation.

The report, based on a survey of 44 pension fund actuaries, found that fewer than 15% of pension schemes had matched 50% or more of their inflation-linked assets. The percentage of matched assets ranged from 25—55%.

Yet 80% of the actuaries polled said their schemes would "likely" or  "almost certainly" conduct a liability management exercise within the next three years, while 75% said their schemes would carry out a buyout or buy-in within the same period.

Robert Gardner, chief executive of Redington, told IPE: "Ten years ago there was a sense that these were long-dated liabilities with plenty of time to pay them off.

"Now some pension funds have traditional asset allocation models, others have embraced risk management and de-risking, and yet others are on the spectrum from low-level matching to almost fully matched."

He said sponsors were relying on a combination of funding and investment performance to take the risks of the table.

"The drivers are pretty strong. The question is the rate of the move," said Gardner.

At the same time, de-risking options such as buyouts and buy-ins had been around long enough for pension schemes to be comfortable with them.

"De-risking has increased over the past five years, albeit from a small base. It will continue up the adoption curve until it becomes mainstream," he said.

Meanwhile, engineering consultancy WS Atkins has reached agreement with Trustees of its pension scheme over a funding proposal to address the scheme's deficit.

The most recent reported accounting deficit under IAS19 was £379m (€440m) as at 30 September 2010, WS Atkins said.

WS Atkins proposed to remove the link between employees' accrued pension and any future increases in salary, as well as intending deficit reduction payments of as much as £32m per annum over the next ten years.

According to the firm, removing the salary link would reduce the funding deficit by £28m down to £265m over ten years.

Additionally, WS Atkins is seeking to carry out an enhanced transfer value exercise for deferred members of the plan and a pension increase exchange for pensioners.

This package of measures follows several other options already adopted by the firm, including closing the plan to new entrants in 2001 and to future accrual for the majority of existing members in 2007.

Finally, Scottish & Newcastle (S&N) pension scheme members claim that the company's new owner, Heineken, has gone back on pension promises and is asking the government to investigate.

The members of the pension scheme said that the brewery has not stood by a pledge to provide discretionary pension increases each year.

According to the pensioners, Heineken promised to provide inflation-linked pension increases when it acquired S&N back in 2008.

However, the members of the pension plan said they were told last year there would be no increases on pre-1997 pensions and were not given any explanation why.

The S&N Pensions Group (SNPG) has written to the Commons' Business, Innovation and Skills Select committee to investigate the allegations.

Heineken refuted the allegations and said it will continue its dialogue with SNPG.

 

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