There has been a 90% increase in the number of UK pension schemes with over £1bn in assets since 2013, research by Barnett Waddingham has uncovered.
In a report published today, the researchers also reveal how 55% of pensions schemes studied were closed to accrual this year, up from just 15% eight years ago.
Expansion of pension scheme assets has meant more significant challenges for trustees and employers at a time when there’s about to be a step change in regulatory expectations on governance and risk management.
The report explains how there has been a sustained trend among schemes towards de-risking investment strategies, which accelerated in 2019 and has continued into 2021.
“While in many ways, this analysis shows a steady continuation of established trends, this is perhaps notable in itself given the nature of the period in question,” said Ali Tayebbi, partner at Barnett Waddingham.
“The funding of large pension schemes appears on average to have been very robust to the turbulent economic markets of the past 18 months.
“Although the COVID-19 pandemic does not appear to have set back these pension schemes, many schemes still have a long way to go to get to their endgames.”
The report reveals how 15% of the schemes studied with over £5bn in assets are estimated to have an average time to buy-out of less than two years.
Previous analysis on large schemes by Barnett Waddingham identified slowing transfer activity among the UK’s largest schemes, with 60% of schemes showing a decrease in transfer activity in 2020 research.
This trend has continued, with 70% of schemes in the 2021 research showing a further decrease in amounts transferred compared to the 2020 data.
“The demand for de-risking actions will continue to accelerate and schemes will need to be more proactive than ever in getting themselves to the front of the queue,” Tayebbi added.
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Author: Chris Seekings