A poll of pension schemes and employers carried out by pension consultants Xafinity has found that the industry is embracing the concept of Integrated Risk Management. Of the more than 100 respondents no-one said that they saw no value in implementing Integrated Risk Management. In contrast:
• 75% said there was value in it
• 20% said there may possibly be value in it
• 5% said that they were undecided.
Encouragingly, 30% of respondents said that they had already developed an integrated approach to risk management. Of the remainder:
• 27% said they hadn’t yet developed a strategy
• 26% said that it was currently underway
• 17% said that they were not sure.
Paul Darlow of Xafinity comments: “It is encouraging that pension schemes and employers see the value in answering the questions posed by Integrated Risk Management. This is perhaps not surprising given current volatility in financial markets and pension scheme finances, but it suggests to me that the Regulator’s latest guidance on this subject has got the balance right. And whilst our poll showed that many schemes had not yet developed a fully integrated approach to managing risk, most already have made some progress and are continuing to do so.”
When asked about how they approach the analysis of employer covenant (a key component of risk for pension schemes) it was interesting to note that nearly two-thirds of respondents used an external specialist to undertake this assessment.
• 36% of respondents used an external specialist to undertake detailed work on the employer covenant
• 27% used an external specialist to undertake high level work
• 25% of respondents said that the company provided information to the trustees to enable them to form a view on the employer covenant
• 9% said that the trustees form their own view on the employer covenant
• 3% said they took a different approach.
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