A Risk-Benefit analysis for sponsors and trustees is needed to make good quality, informed decisions. Perhaps the time has come for sponsors and trustees to be more activist. Don’t wait to be told. Do the work yourself and scrutinise the maths behind your actuaries’ work for Technical Actuarial Standard 300 V2.1 P5. Strategies will change.
The Risk-Benefit analysis will help address:
– What is the probability of a pension not being paid after a Section 75 claim is made on the sponsor?
– What would the member lose if the scheme joined the Pension Protection Fund (PPF)?
– What is the scope for discretionary payments to be made:
o To offset downside risks?
o Cover inflation levels?
o Improve overall payments?
Recent Government action on surpluses, PPF cover and Authorised Payments making one-off discretionary payments easier has changed materially the calculations. Now is the time to reassess.
C-Suite’s modelling of “Step Up / At Risk” directly addresses topics actuarial consultants have yet to grip. Our interactive Value Share model takes the sector into largely uncharted territory.
When you have your own risk-benefit analysis, perhaps then ask yourselves:
- Scrutiny of actuarial work: Why is it still so lacking given that the tone of 3 major reports is so scathing (See attached “Ignoring Penrose, Morris and Kingman was a mistake”)
- Who has made all the money out of pension risk transfer deals and why are there not any meaningful disclosures?
- Why is PRA showing concern about the growth of funded reinsurance after Solvency UK was introduced. Is it linked to the very profitable longevity risk transfer market?
- How did Stagecoach trustees reach a deal so vastly better for members than others have achieved? An alarm bell for trustees?
- Can DB be a big boost for members, sponsors and the economy enabling all stakeholders to enjoy the benefit of a bounce back from excessive derisking.
William would be very pleased to discuss C-Suite’s innovative modelling approach and how it might help inform decisions for your pension scheme.