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
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • December 2018
12

80% of DB pension schemes to be cash flow negative within five years

Open-access content 6th December 2018

Defined benefit (DB) pension schemes in the UK are increasingly worried about liquidity, with four-fifths expecting to be cash flow negative within five years.

2


That is the headline finding of survey of 101 corporate sponsors and trustees by PricewaterhouseCoopers (PwC), which said more schemes are now looking to lower risk, higher yielding assets.

This has led to greater interest in illiquid assets matching cash flows, with many schemes also making liability-driven investments, and hedging interest rate and inflation risks.

"It's no surprise that people are thinking more about how their assets can be better matched to liabilities as schemes mature," Sinead Leahy, PwC head of pension investment consulting, said.

"The survey also indicates a widespread agreement that valuation methods need to be more closely aligned to investment strategy."

Seven in 10 respondents said now might be the time to consider alternative valuation methodologies, which Leahy said was understandable thanks to falling gilt yields and increased deficits.

Nearly two-thirds think their current investment strategy is on track to reach full funding within agreed recovery periods, and without additional support from their sponsor.

The survey findings, which are thought to be representative of all UK DB pension schemes, also show that more than half still manage their funding, investment and covenant separately.

Seven in 10 claim to review their investment strategy at least once a year, although larger ones with more than £1bn in assets are likely to conduct these more regularly.

Leahy said the Competition and Markets Authority's (CMA) review into the investment consultant market had put governance "increasingly under the spotlight", and expects this to continue.

"The survey suggests that, of the schemes which have fiduciary management, only half conduct an oversight of their provider every year," she continued.

"As the CMA recommendations begin to have an impact, we expect to see an upturn both in greater scrutiny when selecting a fiduciary manager and the oversight of these arrangements."


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our December 2018 issue of The Actuary.
Click here to view this issue
Filed in:
12
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Actuarial Analyst, Reserving

London (Central)
Up to £75,000
Reference
118759

Actuarial Analyst, Reserving

London (Central)
Up to £40,000
Reference
118758

Student Pricing Actuary

London (Central)
£45,000 - £55,000
Reference
118764
See all jobs »
 
 

Most-Popular

 
 
 

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
​
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

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200