The International Association of Insurance Supervisors (IAIS) is participating in a global initiative along with other standard setters under the auspices of the Financial Stability Board (FSB) and the G20 group of finance ministers and central bank governors.
Actuaries respond to the 'forward guidance' issued by new Bank of England governor Mark Carney
Actuaries have warned that the Bank of England's decision to hold down interest rates until the labour market picks up will keep up the pressure on UK defined benefi t pension scheme liabilities.
'Forward guidance' issued by new Bank of England governor Mark Carney made clear that he intended to leave interest rates at 0.5% until unemployment falls to at least 7% from its current level of 7.8%. He also said the Bank's Monetary Policy Committee would undertake further asset purchases - also known as quantitative easing - while the unemployment rate remains above 7% if it judged that additional monetary stimulus was needed.
Commenting on the announcement, Marian Elliott, head of trustee advisory services at actuarial fi rm Spence & Partners, said keeping interest rates low would "maintain the upward pressure on liability values of many UK DB schemes".
She added: "Until the unemployment conditions are met and interest rates begin to rise again, we would not expect pension liabilities to reduce signifi cantly on the back of rising gilt yields."
At Hymans Robertson, Graeme Johnston noted that interest rates and inflation risk were "major considerations" for all DB pension schemes.
"Schemes need to decide whether their current assumptions about future interest rates and infl ation are correct as they could be hurt signifi cantly if they are proven to be wrong," he said.
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