Costs soaring say UK schemes
Ninety four per cent of UK pension funds say the management and provision of occupational pension schemes demand more company resources today than five years ago – a figure they expect to worsen – according to the National Association of Pension Fund’s (NAPF) Survey 2000.
Nine out of ten respondents feel that providing pension benefits to members will become increasingly difficult, requiring greater financial input from the plan sponsor.
This, the funds say, is the result of overbearing regulation, red tape and continuing uncertainty about the future pensions environment.
And indications are that UK pension schemes regard these burdens as unnecessary and counter-productive in terms of achieving the government’s objective of encouraging further private pension provision.
However, the report, based on more than 500 responses by managers operating some 850 schemes, reveals that despite such concerns employers are still willing to improve and broaden the range of existing benefits on offer to their members.
Only 14% feel that the introduction of stakeholder will create difficulties for occupational plans.
Nevertheless, ‘uncertainty’ over issues such as the government initiated Myners Review into institutional investment and the minimum funding requirement (MFR), as well as the FRED20 accounting standard, were listed as key concerns by funds, which had led to a virtual freeze in changes to benefit structures, the survey says.
Schemes also voiced strong support (more than 60% in favour) toward the idea of flexible retirement ages and the encouragement of older workers to stay in the labour market.
The NAPF figures also indicate that almost a quarter of plans (23%) now invest in venture capital.
Ninety four per cent set performance targets for their fund managers, with 47% of these using a customised benchmark and 39% comparing performance to a relevant benchmark.
The responses also show that 86% of employees eligible to join a scheme now do so.