A monitor of the current health of UK defined benefit (DB) pension schemes – set up by London-based Legal & General Investment Management (LGIM) – has found that a typical scheme can expect to pay 95% of accrued benefits as of the end of June.
This marks an increase of 0.3% from the previous quarter in the expected proportion of benefits met.
Using the LGIM DB Health Tracker, a quarterly analysis takes into account the risk that a sponsor might default and the impact that would have on the scheme’s members.
“How manageable a pension scheme’s deficit is depends on a number of factors and not just its size,” the firm said.
“These factors include the strength of the sponsor, the size of the deficit relative to the size of the assets, the quality of the investment strategy, and the economic and demographic risks in the scheme.”
According to LGIM, pension schemes should focus on long-term success defined as “the assets outlasting the liability cashflows”.
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