Investment - Articles - Broadstone's Actuarial Director comments on gilt yields

 Post Brexit gilt yields have plummeted further from already historic low levels to break brand new ground with the benchmark 10 year gilt yield now standing well below 1%. This will have a massive and negative effect on most pension scheme’s funding plans. The Pension Regulator’s statement in May suggested that it already anticipated large funding deficits but stated “while most schemes are expected to have larger deficits, the majority of employers are likely to be in a position to be able to maintain or increase contributions to their scheme.”

 Warren Firth Actuarial Director at Broadstone commented, “This post-Brexit world seems full of uncertainty and requires urgent guidance from the Pensions Regulator on how Trustees and employers should be progressing to avoid future criticism. Baroness Altmann has stated over the weekend that “companies should not be under pressure to plug their deficit”, which have just grown hugely overnight almost entirely on the back of the Bank of England’s policy intention to restart QE post Brexit. Broadstone’s view is that more so than any time in recent history, the scarce resources of UK plc needs to be channelled into business investment not continually misdirected into pension schemes chasing lower and lower yields.”

 Firth concluded “How are Trustees supposed to proceed with certainty in the wake of this economic and regulatory maelstrom?”