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The Actuary The magazine of the Institute & Faculty of Actuaries

Analysts get to grips with pensions

Pensions Capital Strategies has surveyed investment analyst opinion on pensions issues. Key findings include:

>> A total of 97% of analysts believe IAS19 is either a fair estimate or an under-estimate of the ‘true’ size of pension liabilities. This is a 9% increase from the figure in 2007
>> Only 12% of analysts disregard the pension scheme solvency position when looking at a company’s financial position, down from 41% in 2007. Moreover, many more analysts, 78% (compared to 57% in 2007), are now asking companies for information on the pension scheme solvency position
>> Some 50% of analysts ignore and strip out any return on assets, which exceeds the discount rate
>> 16% of analysts would view a switch of pension scheme assets from equities into bonds (reducing earnings per share) as positive, and only 9% would view it as negative, with 75% regarding it as neutral
>> A total of 72% of analysts would regard a company’s decision to transfer £100m of IAS19 pension liabilities off the balance sheet by buying them out with an insurance company at a cost of £130m as neutral, and just 28% would view it negatively.

More details are available at www.pensionstrategies.co.uk