Pensions - Articles - JLT issue their latest DB pension index update

 As at 30 November 2018, JLT estimates the total DB pension scheme funding position as follows:

 Charles Cowling, Chief Actuary, JLT Employee Benefits, comments: “The Lloyds Banking Group case on GMP equalisation continues to keep the pensions industry awake at night. The industry is slowly coming to terms with the scale of the task ahead and the efforts necessary to resolve the sex discrimination caused by GMPs. Pension schemes are going to have to recalculate benefits for millions of members, demanding fiendishly complicated calculations that will incur huge additional costs and resources. Moreover, ongoing administration costs for pension schemes are likely to increase significantly as a result.

 “Of course, this blow has come at a time when UK pension schemes and indeed, the wider economy, are facing a looming front of uncertainty as the Brexit deadline draws ever nearer. At this stage it is impossible to know what impact Brexit will have – over either the short or longer term – but that very risk, and accompanying market uncertainty and volatility, is all the more reason for trustees and companies to be looking to take pension risks off the table.

 “The potential good news in all this, is that we may have an opportunity to simplify pension scheme benefits, using conversion legislation recently introduced. We will very soon be in a position to calculate the increase in total value required to each pension scheme member’s benefit. If this is done at the same time as benefits are automatically converted into a much simplified form (including the abolition of all GMPs) then not only will individual pension scheme members get a more straightforward benefit but this simplicity will ultimately flow through to lower costs for companies.”