Availability of climate data from private markets remained patchy in 2023, shows research from Hymans Robertson. This leaves DB and DC asset owners with gaps in their decision-making process and at risk of seeing their own climate reports failing to meet regulatory standards, warns the leading pensions and financial services consultancy. Trustees who have set strong data quality objectives need their asset managers to respond. Whilst TCFD has driven improvements in disclosure, asset owners’ climate goals can only be supported by ongoing improvements in data gathering and reporting, it adds.
A new consulting approach and digital app which empowers defined benefit (DB) schemes to build and implement a cohesive buy-out strategy and plan has been launched by Hymans Robertson today. Backed by innovative digital tools, the PACE (Plan, Aim, Check, Execute) framework helps schemes to aim squarely at buy-out, using dynamic annuity pricing to benefit from the best insights on insurer pricing. It integrates affordability, investment and due diligence considerations to build a robust plan, making the best use of time leading-up to the transaction to get schemes ready for buy-out. The PACE app also uses dynamic annuity pricing to let schemes see how close they are to buy-out and what happens if things change. This new approach from the leading pensions and financial services consultancy supports robust decision making, with dynamic progress checks and Hymans Robertsons’ risk transfer team ready to execute a transaction when the time comes.
“We’re pleased the Government has supported our call to link conditions for surplus extraction to scheme funding level and security of accrued rights. We also welcome the proposal that extracting surplus will not be conditional on use of funds for particular purposes. Surplus extraction will be more effective where it is part of a larger reframing of the statutory objective for DB, to bring about a DB renaissance and secure future pension provision.”
“The Pensions Regulator’s latest annual report on defined benefit (DB) occupational pension schemes as at 31 March 2023, underscores that the landscape has changed rapidly over the last couple of years...
Most people will now have to work longer, or be able to afford much higher pension contributions, to maintain the same level of the PLSA’s Retirement Living Standards (RLS), according to Hymans Robertson’s analysis of the PLSA’s updated figures. The leading pensions and financial services consultancy analysed how different combinations of contribution rate and salary impact the chance of achieving the latest RLS, following the PLSA’s announcement that double-digit increases in annual retirement income are needed this year to achieve Minimum, Moderate, and Comfortable standards of living. The firm warns that trustees, providers, and employers must communicate clearly with members, encouraging them to set, and monitor their progress against, their retirement income target.
Challenges such as a weak economic outlook, combined with the allure of high cash rates could trap retail investors in a cycle of short-term thinking, warns Hymans Robertson Investment Services (HRIS). Upcoming elections could be another significant driver of short-term-thinking for Advisers’ clients, they further warn. To avoid getting caught out, retail investors should be taking a long-term strategic approach, supported by robust diversification, says the leading DFM.
Commenting on the Bank of England’s interest rate hold today, Chris Arcari, Head of Capital Markets, Hymans Robertson, said:
“The Bank hasn’t cut interest rates this month because it’s being cautious, with lingering concerns about some elements of domestically-driven inflation. But it recognises the strong progress on inflation largely driven by supply-side developments, and agrees with consensus forecasts that headline CPI inflation will fall below the 2% target by or in the summer. And this comes at a time where UK real growth, realised and forecast, is very weak."
2024 will be a year of unprecedented change for the risk transfer market, says Hymans Robertson as it issues its annual risk transfer report today. The leading pensions and financial services consultancy’s report expects 2024 to see more insurers competing for buy-ins, with a record volume of multi-billion pound transactions and more use of alternative risk transfer options and captive insurance solutions. These changes represent excellent opportunities for well-prepared pension schemes of all sizes, as there will be more competition at both the large and smaller ends of the market. There will also be a greater variety of established risk transfer options for pension schemes to choose between, helping to solve different endgame objectives.
Comments from Laura McLaren, Head of DB Actuarial Consulting, and Iain Campbell, Senior Investment Consultant.
DB and DC pension trustees investing in the blue economy need a thorough risk management process, warns Hymans Robertson in its report Why oceans and marine biodiversity matter as investment issues, published today. This process will help schemes understand which opportunities align best to their goals and successfully navigate the dual impacts of climate risk and nature loss, claims the leading pensions and financial services consultancy. The report highlights that opportunities for investors include renewable energy, shipping, tourism, fishing and blue technology. Each of these sectors has unique risks but also the potential to deliver significant returns both for investors and the environment.
Hymans Robertson, the leading pensions and financial services consultancy, is proud to announce that it is a founding signatory of the new Sustainability Principles Charter for the bulk annuity process. It was developed in partnership by Accounting for Sustainability (A4S), The Church of England Pensions Board and Railpen.
“The regulations have some welcome changes while keeping the same framework. The updates have addressed some of the biggest concerns, including inconsistencies with the draft code of practice. Changes to reflect the government agenda to encourage scheme investment in productive finance, means fears that some schemes would be hemmed in, or herded towards very narrow low-risk investment strategies, have been reduced. A fixed basis for maturity will help schemes map out their funding and investment strategy with a clear target date that won’t jump around with market conditions...