Sept 2nd -St Stephens Club- Nick Spencer, GAM’s supremo makes startling assertion “DB is bankrupt” no investment strategy can return the typical DB plan to solvency.
Sept 6th- Pension Playpen Lunch in Cornhill- 14 pension professionals sit down to discuss the issue over a pint and a pie (total cost £12 perhead +tip for those on governance watch).
Four positions emerge;-
- Alpha generation– Certain members believed that there is market capacity to create excess returns through skilful investment management
- De-risking– certain members considered the trimming of benefit promises can restore DB plans to solvency “DB isn’t dead- final salary is dead”
- Market cycles– Certain members contended that over time markets will produce long-term return assumptions- schemes should wait for the bounce and not panic
- Regulatory easement– some members argued that tPR could take a more sanguine view to solvency and allow longer recovery periods for schemes with weak employer covenants.
There was general consensus that DB would survive providing the employer was strong enough or incogniscant of the long-term cost of the benefit on offer- local government schemes were cited.
The initial vote showed a split of 7 v 7 between those who thought DB had its chips and those who thought it would survive.
The vote at the end of the lunch was 10 v 4 with the majority believing that DB was a goner.
One can conclude that as a result of the recent debate, the consensus is moving towards a general pessimism on the future of DB.
One can conclude that 14 people had a jolly good time and agreed to meet again on October 4th.