December 2020

03Dec

DB or not DB, what is the solution?

By Mark Daniel  Mark Daniel takes us on a pensions journey, exploring various DB and DC plan designs and how these can help manage costs and possible risks. What a difference two years make. Boris Johnson is now the Prime Minister, Liverpool finally became Premier League Champions and, sadly (for me), Huddersfield Town are back down in football’s second tier. And then there is COVID-19. Who could have predicted any of the above? Admittedly, you didn’t need a...

December 3, 2020
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02Dec

UK. Following Arcadia, Debenhams set to close putting 12,000 jobs at risk

Debenhams stores are set to close after the failure of last-ditch efforts to rescue the ailing store chain. It means all 12,000 employees are likely to lose their jobs when the chain's 124 shops cease trading. The news comes just hours after Topshop owner Arcadia fell into administration, putting 13,000 jobs at risk. Debenhams itself had been in administration since April. Hopes of a rescue were crushed after the last remaining bidder, JD Sports, withdrew. Staff were told the...

December 2, 2020
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01Dec

UK. Arcadia is bankrupt. What will happen to the 10,000 of its pension plan?

The pension pots of thousands of employees of Topshop owner Arcadia are hanging in the balance as the retail group is hours from collapsing into administration. The pension scheme of the Arcadia group, which is expected to go bust today putting some 13,000 jobs at risk, is labouring under an estimated £350million deficit. The defined benefit pension fund could potentially be picked up by the official lifeboat scheme - the Pension Protection Fund - but that would...

December 1, 2020
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November 2020

27Nov

Continuous-time Optimal Pension Indexing in Pay-as-You-Go Systems

By Oriol Roch Ageing population and economic crisis have placed pay-as-you-go pension systems in need of mechanisms to ensure its financial stability. In this paper, we consider optimal indexing of pensions as an instrument to cope with the financial imbalances typically found in these systems. Using dynamic programming techniques in a stochastic continuous-time framework, we compute the optimal pension index and portfolio strategy that best target indexing and liquidity objectives determined by the government. A numerical example is provided...

November 27, 2020
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04Nov

Milliman expands Pension Buyout Index to include competitive pricing rate, which drops to 100.2% in September

Milliman, Inc., a premier global consulting and actuarial firm, today announced the latest results of its Milliman Pension Buyout Index (MPBI). As the Pension Risk Transfer (PRT) market continues to grow, it has become increasingly important to monitor the annuity market for plan sponsors that are considering transferring retiree pension obligations to an insurer. Read also Retirement Saving Is Hard Even For Those Who Can Afford It While we continue to analyze annuity purchase rates from all insurers, starting this...

November 4, 2020
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03Nov

UK. Pensions risk transfer market resilient against Covid-19

The UK pensions risk transfer market has so far shown remarkable resilience to the economic impact of the Covid-19 pandemic. Although market conditions may mean some schemes will be further away from being able to de-risk than they were before the pandemic, the market remains busy and others will still be in a position to proceed with planned risk transfer activity. We can also expect to see a greater volume of forced transfer activity reaching the market in the...

November 3, 2020
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October 2020

12Oct

Half of UK pension funds seek buy-out

About half of all UK defined benefit pension funds are now targeting a buy-out as their long-term objective, new research shows. A survey of 100 DB pension scheme trustees by consultancy Hymans Robertson revealed the number of pension funds aiming for self-sufficiency has dropped markedly in the past four years, down to just 37% from 81%. Now, the number of funds aiming for a buy-out has increased to 49% - up from just 15% four years ago. The remaining...

October 12, 2020
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September 2020

29Sep

Canada. Ontario implements new funding relief measures for defined benefit plans

Ontario Regulation 520/20 (the “Amending Regulation”) which amends Regulation 909 under the Pension Benefits Act (Ontario) (the “PBA”) came into force. The Amending Regulation provides temporary relief from pension funding obligations to employers of certain Ontario-registered defined benefit plans in two respects, as discussed below. Extension to make Catch-up Contributions The Amending Regulation provides employers of Ontario-registered defined benefit plans with a temporary extension of time to make contributions that are due under a valuation report (“Catch-up Contributions”) that...

September 29, 2020
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24Sep

US. Pension Buyouts a Relative Bargain, Says Mercer

Now may be a good time for companies looking to de-risk their defined benefit (DB) pension plans to consider an annuity buyout, according to new data from consulting firm Mercer, which shows a hypothetical retiree buy-out transaction costs an estimated 97.7% of a plan’s accounting obligations. Mercer said the new data is a result of recent tweaking the company made to its US Pension Buyout Index, which tracks the relationship between the accounting liability for a defined benefit plan...

September 24, 2020
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July 2020

30Jul

Best quarter on record for Canadian defined benefit pension plans: RBC Investor & Treasury Services

Canadian defined benefit pension plans experienced a pronounced upsurge in the second quarter, posting a median return of 9.6 per cent, according to the RBC Investor & Treasury Services All Plan Universe. This marked the highest single quarter return in the universe's history, reversing the steep Q1 losses and raising the median plan's return to 1.4 per cent on a year-to-date basis. The gains followed a series of aggressive fiscal and monetary support measures introduced in March to...

July 30, 2020
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