Pensions - Articles - Challenges force pension schemes to consider consultants


A new report by Barnett Waddingham, shows the majority of UK pension schemes are considering changing consultants, as the industry faces increasing challenges. The ‘Navigating Change’ report, which researches the views of senior trustees from larger UK pension schemes, finds more than half of schemes will change – or are considering changing – their actuarial consultant in the next year.

 According to Paul Houghton, partner and head of trustee consulting at Barnett Waddingham, the catalyst for the overhaul of consultant relationships has been the changing dynamics within the industry.

 “The UK pension industry is experiencing a structural shift as defined benefit (DB) schemes reach mature status. As the number of pensioners increases, schemes’ cashflow is becoming restricted, often negative, and trustees need to start planning for their scheme’s end. This change is influencing the way trustees manage their schemes and has led many to seek a new type of actuarial consultant.”

 Relationships under threat
 The report states that looking for a new actuarial consultant is, historically, an ‘irregular occurrence’. Houghton explains: “Schemes have been slow to change their actuarial consultant – it is often the longest-established professional relationship – unless there has been a breakdown in the relationship or they consider the level of fees to be poor value for money.

 “However, the research shows a high number of respondents (61%) are changing or have already changed their actuarial consultant recently or are considering a change now. A further 9% are likely to consider a change in the near future.”

 A new direction
 Houghton believes the dramatic re-evaluation of long-standing consultant relationships is down to a heavy focus on major structural change and realignment of strategy.

 “Scheme maturity and a focus on the potential end game of risk reduction, leading towards buyout, a consolidator or running without risk, is a major driver to revaluating these relationships. Trustees and scheme managers now face the end game of securing benefits for their members and this can require a complete reconsideration of strategy.” he said.

 This is underlined by the report which shows the majority (58%) of respondents are looking to increase their focus on their transition between LDI and the ultimate end game stage as a priority, while 26% are currently considering it.

 “There is also evidence schemes feel their present incumbent may not have the necessary fit – a combination of approach, culture and skills but in particular, the ability to think freely and offer genuinely strategic advice – to rise to the challenges a scheme considering its end game strategy now faces. The days of a one-size-fits-all, product led approach are no longer applicable as shortened time horizons mean that schemes need to reflect their own unique circumstances” he added.
  

Back to Index


Similar News to this Story

Businesses want extension of auto enrolment to more workers
Employers support the targeted extension of automatic enrolment to more workers. 74% of businesses want to see it made available to the self-employed
TPR issue single code of practice statement
As part of becoming clearer, quicker and tougher we intend to make changes to our existing codes of practice. These changes will ensure that we are se
No such thing as a typical drawdown customer
According to research from Royal London income drawdown customers are taking full advantage of pension freedoms to take their income in a variety of w

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.