Sections

Cost of de-risking remains a barrier for UK trustees

Related images

  • Cost of de-risking remains a barrier for UK trustees

Related Categories

UK - Trustees see cost issues as the biggest barrier to reducing risk in a pension scheme, leading a significant number to make deficit funding programmes a priority, a study has revealed.

A survey of 243 lay and independent trustees, consultants and pension managers sponsored by insurance firm Pension Corporation revealed 73% of UK scheme trustees plan to reduce risk exposure in the near future through a variety of strategies.

The Future of Pension Schemes survey showed that 65% of respondents have already taken steps to reduce risk, with 28% reducing exposure to equity markets, a quarter adopting a liability driven investment (LDI) strategy, and 8% having completed one or more pension insurance buy-ins or buyouts.

When considering future liabilities, 57% of trustees said they were considering implementing an LDI strategy, 35% were looking at longevity insurance and just over 10% were considering fiduciary management.

Although 45% of respondents said they were examining the possibility of a buy-in or buyout, 65% admitted that cost was a significant barrier when considering risk-reducing measures. The report showed that 53% saw the funding of deficits as a priority, while 74% of respondents had made becoming fully-funded or self-sufficient their short to medium term goal.

David Collinson, head of origination at Pension Corporation, said: "The study demonstrated that the fall of Lehman Brothers had a marked impact on the risk tolerance of pension fund trustees and we can see that the vast majority are seeking to limit their exposure to risk."

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2487

    Closing date: 2018-11-22.

  • QN-2489

    Asset class: Alternatives.
    Asset region: Global.
    Size: $100m.
    Closing date: 2018-11-30.

  • QN-2491

    Asset class: Alternatives.
    Asset region: Global.
    Size: $20m.
    Closing date: 2018-11-30.

Begin Your Search Here