UK – The shift from defined benefit to defined contribution pension arrangements may simply be a cyclical trend that could be reversed, says the president of the Institute of Actuaries.
There was a “strong possibility” that the shift from DB to DC could be a cyclical event, Michael Pomery said in a lecture last night.
Although it certainly felt like an irreversible trend, there might be reasons for a revival, he said at an event organised on behalf of the Pensions Archive Trust at Merrill Lynch in London.
But there would be no return to DB schemes with “bells and whistles”, but the pendulum could swing back. Referring to DC plans he said: “There’s going to be some very disappointed pensioners out there when these schemes mature.”
“It may not be long before a major company offers a DB scheme,” he added.
Pomery, who’s set to step down as the president of the Institute, also said he would retire from Hewitt Associates after 40 years with the firm. He will be succeeded at the Institute by Nick Dumbreck of Watson Wyatt.
Elsewhere, a group of investment analysts has called for the disclosure of companies’ longevity exposure.
“It is clear that many companies will have to revise their longevity assumptions upwards at the next actuarial review,” the group said in a letter to the Financial Times.
“As professional users of financial reports and members of the Corporate Reporting Users Forum we believe it is essential that companies begin to disclose information about their current assumptions in terms of life expectancy post retirement and also the sensitivity of the pension liability to changes in these assumptions.”