Pension deficits are proving frustratingly persistent. Markets are running adversely, regulators are providing no respite. Meanwhile employers look to retain cash to strengthen balance sheets. This landscape looks set to pitch Trustees and Employers into battle. But we believe it is time to RE THINK - because Trustee and Employer goals are fundamentally aligned, and there are opportunities for genuine “win-wins”.
According to the latest research issued by KPMG Investment Advisory, UK Liability Driven Investment (LDI) assets under management have increased 28 percent to £312 billion in the 12 months to December 2011. However, despite this growth, the aggregate new asset inflow into LDI investments from UK pension funds was close to nil over 2011.
Since we issued our Enhanced transfer value (“ETV”) survey in August 2011 there has been continuing activity in this area both in terms of the number and variety of exercises being carried out and also the level of scrutiny and intervention from regulators.
Phasing in from 2012, employers must take responsibility for enrolling all eligible UK employees into a qualifying pension scheme. This will inevitably lead to increases in costs and administrative complexity, and employers have to act - if they do not comply, they will be liable for fines. KPMG Pensions has developed a standard approach to help clients plan for and manage the impact of Auto-enrolment.
KPMG has released the second survey on asset-backed funding for pensions. The survey shows that asset-backed funding for pension schemes continue to grow with £5bn of asset-backed contributions being made to pension schemes over the last 2 years.
The latest edition provides an incisive update on how the market has developed over the year and how these structures are being used within the pensions industry.
KPMG has released the first market survey on Enhanced Transfer Value ("ETV") exercises. The KPMG “Enhanced Transfer Value” (ETV) survey shows that ETV exercises have grown increasingly common as a tool for employers to manage their pension risks and their use is set to increase. Over 90,000 defined benefit pension scheme members have been offered an ETV - a sum greater than their cash equivalent transfer value - in order to leave the scheme over the last three years, with another 70,000 expected this year.
The survey gives details on the types of offers made, the use of cash enhancements and the rates of member engagement and take-up.
- Read a copy of the press release and further information
KPMG has surveyed the investment management community to establish a clear picture of the current landscape for Liability Driven Investment (LDI).
With life expectancy increasing and the market outlook uncertain, meeting pension commitments is growing concern for many companies running Defined Benefit (DB) pension schemes.
