Pensions - Articles - PTL announces results of third quarterly DB risk survey

 Richard Butcher, Managing Director at PTL, said: “This quarter’s survey highlights some very interesting changes. Employer covenant risk remains the highest-rated risk and is up by a sizeable margin for the second consecutive quarter, indicating continued uncertainty about the UK economy and employers’ ability to meet their funding needs. In a world of integrated risk management, this will most likely result in reduced exposure to investment risk and more conservative funding valuations down the line.

 “It’s also interesting that an increasing number of people think more stringent deficit repayment rules will be introduced – this probably comes in the wake of TPR’s 2018 annual funding statement where they made clear they expected trustees to be more robust in negotiating the balance between deficit reduction and dividend payments. These two combined hint at a cycle of far more difficult funding negotiations between trustees and employers.”

 Butcher continued: “The risk score for the investment impact of Brexit has once again increased, perhaps as we near the end of the negotiation period without any real clarity around what will happen to the markets, or those who raise capital through them. Cyber risk has also spiked while the scores for longevity, GDPR and inflation all drop. A number of new issues were flagged under ‘other’ this time around which could collectively be grouped into the categories “compliance” or “governance risk”. This may be reflective of TPR’s relatively new ‘quicker, clearer, tougher’ approach and the fact that more trustees are feeling the pressure of getting things wrong.”

 PTL will continue to run the survey every quarter, with the next being undertaken in July 2018. Anyone wishing to participate should contact rbutcher@PTLUK.com.