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UK roundup: TUC, FTSE pensions, NAPF, Mercer

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  • UK roundup: TUC, FTSE pensions, NAPF, Mercer

UK - The UK union umbrella group TUC has called for more comprehensive reporting of company pension provision within annual reports, as its most recent survey of pension arrangements for FTSE company directors found their average defined benefit (DB) pension was now worth £4.3m (€5.4m).

According to the latest instalment of its Pensions Watch survey, the transfer value of DB pension savings increased by £400,000 year-on-year, while the average company contribution of a director's defined contribution arrangement was £144,508.

The TUC noted that an increasing number of directors were receiving cash payments in lieu of contributions, with payments increasing by more than £26,000 to £165,000.

General secretary Brendan Barber said: "The gap between the pensions of top directors and everyone else does not just reflect the excess of the super-rich, but shows just how poor pensions are for ordinary workers in the private sector, where more than two out of three get no employer pension help."

He said the imminent introduction of auto-enrolment would help address the issue, but that employers needed to offer more than the "bare minimum" if the policy was to tackle the "growing pensioner poverty crisis".

The TUC also recommended the introduction of a legal requirement for more comprehensive reporting on company pension provision, suggesting these could be included as part of revised remuneration reporting restrictions currently under consideration.

The suggestion was backed by the National Association of Pension Funds, with its head of policy Darren Philp saying that greater transparency was needed around boardroom pensions.

"Boards need to be open about their pension arrangements so shareholders such as pension funds can hold top management to account," he said.

Philp acknowledged that it followed that those on higher wages would accrue larger pension pots, but he added that company investors might have important questions to ask over the level of fairness when comparing the arrangements of directors and employees.

In other news, the accounting deficit of DB pension schemes in the UK increased marginally over August to stand at £63bn, according to Mercer's latest Pensions Risk Survey.

The deficit, equivalent to a funding ratio of 89%, went up from £61bn at the end of July.

According to Mercer's data, over the month, the yield on high-quality corporate bonds remained virtually unchanged, but the market's expectation for long-term inflation increased marginally.

This led to an increase in liabilities of around 1% over the month to £576bn as at 31 August, while asset values also increased from £510bn as at 31 July to £513bn as the end of August to offset the increase in liabilities.

Adrian Hartshorn, partner in Mercer's financial strategy group, said: "Despite the slight increase in the market-implied outlook for inflation, generally speaking, we continue to view the pricing of inflation hedging as relatively attractive compared with the recent past.

"Market opportunities, such as this one, arise from time to time, and trustees need the governance structure in place to take advantage of them."

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