Pensions - Articles - Impact on DB pensions from BoE base rate increase


Hymans Robertson comment on the impact on DB Schemes of the anticipated increase in Bank of England’s base rate this week.

 Elaine Torry, Co-Head of DB Investment says: “For defined benefit pension schemes the impact of any short term interest rate is unlikely to move the funding dial. However, the rise in gilt yields which are happening concurrently cannot be ignored by these schemes.

 “The significant, c0.9% rise in gilt yields that has been experienced since the start of the year, will be causing a greater impact. This increase in medium and longer dated gilt yields could see liability values reduce by c15% leading to an average duration, £100m scheme facing a reduction in liabilities of c£15m as a result.

 “For those DB schemes that are not fully hedged against interest rate movements, this gilt yield rise could prove a much welcome tailwind for funding and present an opportunity to reduce risk and lock in funding gains. We would urge trustees to consider whether this recent movement is an opportunity to take further steps towards shoring up the funding position and protecting their members benefits.”
  

Back to Index


Similar News to this Story

No retirement plan leaves you four times more stressed
Almost a third of people in the UK admit to having no plan for their finances in retirement (30%). People without plans are four times more likely to
Regulatory risk remains high on the list of schemes concerns
Aon has released the UK results of its ‘Global Pension Risk Survey 2025/26’, which highlights regulatory risk as a continuing concern for defined bene
PPF publishes latest PPF 7800 update for September 2025
This update provides the latest estimated funding position, based on adjusting the scheme valuation data supplied to The Pensions Regulator as part of

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.