Putting defined benefit pensions in context
FTSE350 Pensions Analysis Report - 2018
05 Dec 2018 - Estimated reading time: 10 minutes
Find out the key themes emerging over the next year for Defined Benefit (DB) pensions in our tenth annual FTSE350 pension analysis report. Putting the schemes of the FTSE350 in the context of the businesses that support them, we explore two strong themes affecting DB pensions:
- A tougher regulator
Despite 44% of schemes now in surplus on IAS19, companies must not be complacent. Those with valuations on the horizon may need to increase deficit contributions or implement additional risk management and contingency plans.
The analysis includes dividend payments relative to pension contributions and the length of time it will take to pay-off the IAS19 deficit for the 56% of companies with a deficit.
- Take-off of the DB consolidation market
2018 has also been a record breaking year for the risk transfer market. There have been new consolidators emerging in this market which will allow a significant minority of schemes to reduce pension risk at a lower cost than buy-out. In fact, 9% could transfer their pension scheme into a commercial consolidator, achieving a clean break for the employer, with a cash top-up of less than one month’s earnings.
The analysis shows the proportion of companies that could take immediate action to benefit from a range of consolidation options including buy-out, transferring to a commercial consolidator, merging DB schemes and transferring to a DB Master Trust.
We hope you find this report interesting and insightful. If there is anything covered in the report that you would like to discuss in more detail, please don’t hesitate to get in touch.