Year ends on bleak note for UK pension schemes

Pension nest egg 410The accounting deficit for UK defined benefit pension schemes rose by a third to £84 billion (€100 billion) during 2011, according to consultancy Mercer. The change was equivalent to a three-point fall in funding levels to 85%. Mercer said the deficit increase was caused by a decline in corporate bond yields, which are used to discount liabilities. This decline increased the value of schemes' liabilities. Ali Tayyebi, senior partner at Mercer, said the deficit increase meant 2011 ended on a “bleak note”. The increase came despite a rise in asset values, which ended the year at £478 billion, and a significant reduction in long-term inflation expectations. Adrian Hartshorn, partner in Mercer’s Financial Strategy Group, said managing liability risk will be an important focus for many companies in the coming year. “We expect to see the implementation of both traditional and non-traditional risk management strategies including interest-rate and inflation hedging, longevity hedging, liability management exercises or the use of non-cash funding options to smooth cash contribution requirements,” he said. ©2012 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.