Pension funds comment on Regulator's funding analysis
10 October 2012
The National Association of Pension Funds (NAPF) commented on evidence published today by The Pensions Regulator of how flexibilities in the defined benefit (DB) funding regime have been used by pension schemes and sponsoring employers.
Mel Duffield, Head of Research, NAPF, said:
“This clearly shows the intense pressure that pension funds are under at the moment. Record low gilt yields, driven down by quantitative easing and the UK’s reputation as a ‘safe haven’ for investors, are pushing up fund liabilities and leaving employers with big deficits to fill as a result.
“The Regulator’s analysis suggests that three quarters of DB schemes are likely to need to extend the length of their ‘recovery plans’ by at least another three years, as well as increasing their contributions into their scheme to plug the deficit. Nearly half of all DB schemes are also likely to need to make use of other flexibilities so that their contributions are manageable.
“That so many schemes are having to explore these flexibilities shows that these are exceptional times. The flexibility of the system is greatly valued by pension funds, but we do not think it is enough. There needs to be a wider rethink about how deficits are valued in relation to gilts.”
Notes to editors:
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]