 There is one overriding image that comes to mind when considering the UK results of the 2013 Global Pension Risk survey. It is of a donkey pursuing a carrot dangling from a stick hooked in front of the donkey. As the donkey moves, the carrot continues to stay just as far away.
Most UK pension plans (over 90%) now indicate that they have a long-term objective – typically expressed as a buy-out objective or self-sufficiency objective. Over half the plans surveyed now monitor their progress against their long-term objective. The vast majority have a timescale in mind to reach that long-term objective.
But the evidence of the 2013 survey is that the Promised Land just keeps getting further away. The expected time to the final destination has not got shorter and indeed has lengthened since we carried out the previous Global Pension Risk survey in 2011.
Perhaps this is not surprising given the circumstances. Certainly schemes have reacted by putting in place asset de-risking plans in increasing numbers. What they haven't done is to take advantage of liability management exercises in the way they themselves predicted. Asset delegation continues apace, with the trend being full delegation for smaller schemes and delegation by asset class for larger schemes. This is one example of another clear trend: larger schemes reacting in more complex and sophisticated ways to essentially the same issues.
UK defined benefit plans seem to show no signs of settling for a quiet life, and as preparation for that end position continues to dominate the pension risk landscape, so too will DB plans continue to demand more than their fair share of attention and air-time.
The Global Pension Risk Survey 2013 covers a range of pension risk topics and concerns, including:
- Managing benefits and liabilities
- Dealing with deficits
- Investment issues
- Measuring and monitoring pension risk
- Current issues
Download a copy of the survey here to find out more about Global Pension Risk.
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