Press Releases

Many companies with DB Pensions Schemes are not giving enough focus to having the right governance structure in place for their endgame journey claims leading pensions and financial services consultancy, Hymans Robertson. It warns that for a scheme’s endgame strategy to be a success its governance structure must allow it to make many timely decisions and to respond to changing circumstances, yet many schemes simply aren’t set up for this.

Commenting on the Financial Reporting Council’s (FRC) Consultation Paper ‘Proposed revision to AS TM1: Statutory Money Purchase Illustrations’, Callum Stewart, Head of DC investment says:

"We welcome the FRC’s consultation on proposed changes to the Actuarial Standard Technical Memorandum 1 (AS TM1) which takes on an additional layer of significance given the statutory illustrations of money purchase arrangements which will feed into the pensions dashboard. Whilst we agree with the headline objectives supporting the proposed changes, we have significant concerns with some of the proposed methods for achieving them. In particular, we believe the proposed accumulation rate methodology will not enable fair comparisons across different providers and would in fact disadvantage more sophisticated investment approaches that, for instance, invest in illiquid assets and could provide better value. We also believe that now is the time to move away from the historic annuity focus and introduce an approach reflecting the flexibility DC savers have. We hope the FRC will address our concerns and consider the alternative solutions we have outlined.”

Commenting on the Pension Policy Institute (PPI)’s announcement on research on annuities in ‘Set for Life?’ paper, Kathryn Fleming, Partner, Hymans Robertson, says:

“Annuities are often seen as one of the least popular of the pension freedom options, so it is fantastic to be able to support this PPI research and helping to raise awareness of where they can add value. An annuity can have an important role when combined appropriately with the other pension options as part of an individual’s retirement plan. This note, rightly, explores the key role annuities will play as DC pot sizes grow, education increases and the industry considers retirement options as a sequence of decisions, instead of a “once and done” event. As an industry we are still on a journey to fully integrate the pension freedom options, ensuring that they maximise individual retirement outcomes. It is great to see the PPI point towards the “teachable moments” along this journey, between age 50 and State Pension Age, where the industry needs to raise its game.

Hymans Robertson, the leading pensions and financial services consultancy, has appointed Paul Hewitson to be Head of ESG for Risk Transfer. This new role recognises the rapidly increasing importance of ESG and responsible investment considerations for trustees and sponsoring employers who have completed, or who are looking to complete, buy-in transactions. Paul’s role will see him lead the risk transfer team’s comprehensive review of the ESG credentials of the eight insurance companies that offer buy-ins.

Commenting on the TPR and FCA announcement on plans to develop common Value for Money (VFM) measurements, Laura Andrikopoulos, Head of Governance, Hymans Roberson, says:

“We are pleased to see the FCA and TPR recognising the complexity in identifying a few simple metrics to compare value for money in DC pension schemes. Whilst we welcome greater transparency and consistency in this area, particularly between Trust and Contract-based schemes, an overly simple approach may give misleading impressions of value. For example, lower costs but a poorer quality investment strategy and little flexibility at retirement do not necessarily represent better member outcomes or value than a higher cost scheme. A few simple metrics won’t necessarily bring a level playing field for all DC members. It is vital that the focus is not just on cost but on long term member outcomes.”

Hymans Robertson today publishes its new paper “A Closer Look at Capital Backed Journey Plans” which shows that Capital backed journey plans (CBJP) are becoming an increasingly key part of the growing alternative risk transfer market and could provide schemes with a lower risk means of meeting their long-term objectives.

The Government should introduce State auto-enrolment credits for career breaks and radically change the framework of occupational pensions to reduce the inequality of the widening Gender Pension Gap, Chris Noon, Partner at leading pensions consultancy Hymans Robertson, has stated in an open letter to the Work and Pensions Select Committee. He has outlined his thoughts in the letter following his appearance to give evidence at the Committee’s “saving for later life” discussion.

Current high levels of inflation are causing strain on LDI collateral pools as a result of rising gilt yields, and DB Schemes must take action, Hymans Robertson warns. The leading pensions and financial services consultancy says that DB Trustees must do much more to stress test their pool especially as further interest rate rises remain likely over the remainder of this year. Trustees must ensure there is an acceptable level of resilience in place.

Commenting on the impact on DB Schemes of the anticipated increase in Bank of England’s base rate this week, Elaine Torry, Co-Head of DB Investment says:

“For defined benefit pension schemes the impact of any short term interest rate is unlikely to move the funding dial. However, the rise in gilt yields which are happening concurrently cannot be ignored by these schemes."

Commenting on TPR’s Annual Funding Statement 2021/22, Laura McLaren, Partner, Hymans Robertson says:

“Today’s Annual Funding Statement is unlikely to cause a major stir, given that TPR’s been trailing many of the key points for some time. Nevertheless, there are some useful prompts on how defined benefit schemes should be approaching 2022 valuations in the current landscape. Recent market performance means funding remains on track for many – and an increasing number of schemes will be approaching fully funded on a technical provisions basis – but events of the last few years are a reminder that things can, and do, change quickly. We’re therefore supportive of the overarching message to trustees and sponsors to focus on developing robust long-term plans and managing risks."

With a significant downside risk in financial markets at present, DB Schemes should act quickly to lock in recent funding gains, according to the latest findings from Hymans Robertson, the leading pension and risk consultancy.

Hymans Robertson, the leading pensions and financial services consultancy, has appointed Shani McKenzie to Head of Sole Trustee Services. Recognising the increasing growth of sole trusteeship and the impact on service provision, Shani’s new role will see her lead the firm’s DB sole trustee services to its existing and future professional trustee clients.