DB Schemes urged to act quickly to lock in recent funding gains
13 Apr 2022
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.
Commenting on the importance of swift decision making, Alistair Russell-Smith, Head of Corporate DB, Hymans Robertson says:
“DB funding levels are holding up well at the moment. Reasonably strong growth asset returns, and very significant increases in yields (both real and nominal yields are up more than 60bps since the start of the year), mean funding levels have improved in 2022. But the continuing Ukraine crisis means that there is a significant downside risk in financial markets going forward, potentially leading to an increased risk of funding level falls in the future.
“Corporates in the midst of a triennial valuation, for example with a 31 March 2021 or 31 December 2021 valuation date, should therefore look to finalise valuations as soon as they can and lock in favourable contribution schedules. Likewise corporates should consider de-risking investment strategies, and increasing hedging to lock in recent funding gains, particularly if valuation packages are predicated on scheme funding staying at current levels. We would urge schemes to act quickly to ensure they lock in funding gains, before its too late.”