Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • December 2012
12

Government urged to act quickly on pensions regulatory reform

Open-access content Thursday 6th December 2012 — updated 5.13pm, Wednesday 29th April 2020

The government has been urged to move forward as soon as possible with plans announced in yesterday’s Autumn Statement to address the rising long-term cost to companies of pension provision.

2

In the statement, Chancellor George Osborne said the Department for Work and Pensions would consult on whether companies with pension scheme valuations next year or later should be able to smooth out their liabilities and assets. It will also consult on giving The Pensions Regulator a new statutory objective to take into account how the long-term affordability of deficit recovery plans are affecting employers.

Darren Philp, director of policy at the National Association of Pension Funds, welcomed the move, which he said would help to address the volatility in funding deficits that companies were currently experiencing.

'Firms are being forced to divert cash away from jobs and investment into filling holes in their pension funds. We think quantitative easing has distorted the picture and that the deficits can be misleading.'

'But time is of the essence,' he added. 'It is important that any change is implemented quickly, and helps companies currently going through their funding valuations. These firms are the most affected by the current low gilt yields, and any support should be extended to them too.'

Dr Deborah Cooper, a partner at Mercer, also called for clarity on the approach to be taken by the DWP. 'What is most important is that this uncertainty about how financing pension schemes should operate in the future is resolved as quickly as possible,' she said. 'It makes it difficult for trustees and employers to take informed decisions about how they run the scheme and manage risk and could create an uneven playing field between different "tranches" of scheme valuations.'

Following Osborne's announcement, the chair of The Pensions Regulator, Michael O'Higgins, issued a statement that welcomed the 'wider debate' of 'fundamental issues' covered by the consultation. 'Whatever the outcome of the consultation, trustees will need to continue to act according to their fiduciary duties,' he added.

John Ball, head of UK pensions at Towers Watson, said the regulator's statement made it clear that it believed the responsibilities of trustees and companies remain unchanged for the time being.

But he added: 'Uncertainty over key areas of the funding regime will however make it very difficult for those with early 2013 valuations to make decisions and we urge the DWP to complete its review as quickly as possible.'

Martin Potter, partner at Hymans Robertson, said that while plans to smooth asset and liability values were likely to have a 'significant effect' on reducing the UK's overall DB pension deficit, more long-term action was needed.

'Is a solution which effectively sweeps the problem under the carpet really sustainable or viable?' he asked. 'We would argue not. Tinkering with the measurement just because the answer it gives isn't palatable is in nobody's interests.

'Companies, trustees, employees and ratings agencies would be better served by shifting the emphasis away from a single marked-to-market figure towards a long-term risk management framework.'

A note of caution was also sounded by Andrew Vaughan, chair of the Association of Consulting Actuaries, who said: 'Certainly, it is important that sponsors of defined benefit schemes are not disadvantaged by short-term economic policy decisions designed to boost the economy, but - equally - we do not want to move to a position where either sponsors or trustees lose clarity on the funding needed to meet pension obligations as they fall due.'

This article appeared in our December 2012 issue of The Actuary.
Click here to view this issue
Filed in
12
Topics
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

New Fast-Growing Team - Actuarial Systems Development

London (Greater)
Excellent Salary Package
Reference
143762

Actuarial Pension Consultant – Scotland/Remote – Up to £90,000 plus bonus

Edinburgh / Glasgow / Remote working
Up to £90,000 + Bonus
Reference
143761

Part Qualified Pensions Actuary– Specialised Pensions Consultancy - Scotland/Remote - Up to £70,000

Edinburgh / Glasgow / Remote working
Up to £70,000 + Bonus
Reference
143760
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ