One of the best Pension PlayPen coffee mornings was delivered by Steve Hodder a couple of weeks back. The teams file went missing but it’s been relocated and I’m pleased we can now share what was said and asked.
It looks like LCP are going to repeat the dose, this time on their home system and I am sure I won’t be the only Pension PlayPen member who will attend for a second time.
It’s the £1.5tn question – is it time to consider DB schemes as a huge opportunity for the UK economy and generations, rather than a problem?
Is it really right that £1.5tn is heading for ultra low-returning investments, at a time when the UK is facing a multitude of financial problems?
LCP think it is time to be more ambitious with DB pensions. They have been developing an idea for around a year to unlock the potential of DB schemes, whilst fully-protecting members. They will update you on how we are working with government, treasury and others to see if we can make it happen.
Join Steve Hodder and Laasya Shekaran at 11am on 24 May for a webinar (registration link here ), hosted by Steve Webb, where LCP will set out our idea to change how DB schemes are managed.
Steve and LCP provide some excellent challenges for the £1.5tn of funded DB schemes. (Was PPF success helped by QE? What QT Buffer is necessary?) My reply and challenge however relates to the £2.1tn liability for unfunded DB pensions for our public servants. For these 5m hugely deserving members, the fund is the UK economy. “The least appreciated actuarial assumption in UK pensions” (see my Professional Pensions opinion*on 9th May) outlines how these liabilities depend on GDP growth.
The bigger £tn problem and more important solution is for these benefits and deferred pay increases to be linked to GDP growth.
(Actuarial readers will see similar I&FoA Communities Forum pieces under the heading of “Ponzi scheme?”)