The headline seems a disaster for pensions.
The ABI and those preying on open DB pensions, are quick to point to the need to insure away the risk of pension paying people deferred pay in later life.
If you had run a headline just five years ago that bemoaned pension scheme surpluses falling by 10% , you’d have been laughed out of the room.
I remember how those who believed we had hedged pensions against the market found in October 2022 they had wrecked the Treasury’s plan for growth.
Our crazy hedging nearly drove our country to disaster and now we think we are in need of more insurance?
After a fall of £9.9bn leaves our funded DB pensions over a quarter of a trillion pounds to the good (beyond what is needed to meet obligations to pay people in full), are we quaking in our pension boots?
The latest update to the PPF’s 7800 Index, which estimates the section 179 funding position of DB schemes, revealed the aggregate surplus had fallen to £263.8bn, compared to the £273.7bn surplus recorded in February.
I am with John Hamilton who sees the capacity of our pension system to withstand the current market volatility as something to be proud of.
If we want Britain to grow , we need enterprise and we need pension schemes to fund it. Insuring away our chance to grow , shipping money off to Bermuda and buying US private credit is not my idea of investment in the country where we work and where we retire.
We should not forget that the Pension Scheme Chair of Stagecoach Group Pension Scheme prevented his £1.2bn pension scheme from being insured by being innovative and working with another British sponsor – Aberdeen – to keep his members invested and in surplus. Two thirds of the surplus in the Stagecoach Group Pension Scheme goes to the members, how much would have done if the scheme had been bought out by an insurer?
Sadly there is no ABI to stand up for pension schemes like the Stagecoach scheme. If there was we would not have to make these arguments on linked in and on this blog. The fact is that the marketing budget is with the insurers and so long as the ABI has the press and the Treasury in their pockets, it will be difficult for the likes of John Hamilton to get our ears.
But with 75% of schemes in surplus (TPR stat) and consultants finally seeing the advantages to them (as well as pensions) of keeping DB plans running on, I suspect that common sense will win through.
Here are PPF’s current numbers
