Pension schemes in the UK need to find a solution. Defined-benefit pension schemes have become expensive for employers, who are required to provide a certain level of indexation to employee pension plans. Defined-contribution schemes have become risky for employees, leaving them to either feast or famine at retirement based on the market.
The government recently rejected proposals from the Association of Consulting Actuaries, but promised a report in June on risk-sharing as a possible solution.
I recently did a video interview with Hamish Wilson, partner at Hamish Wilson & Co. Actuaries and Pension Consultants about the tumultuous state of UK pension schemes. He says there needs to be middle ground between the two current extremes in UK pension plans. He also stressed that the government needs to act with immediacy, or else the taxpayer could be left footing the bill for defined-benefit pension schemes for the public sector. Meanwhile, the private sector will all have defined-contribution pension schemes.
Visit our multimedia section next week to see a video on the topic.
This week in our multimedia section Global Custodian interviewed Spitalfield Advisors about the effect of the credit crunch on the securities lending market. The sub-prime mortgage crisis has created opportunity for lenders. Those with government bonds and cash collateral are reaping in the benefits. The sub-prime mortgage crisis has also served as an education period for financial institutions, as the relationship between borrows and lenders experienced tension. Overall, financial institutions have learned their lessons and experienced letdowns and rewards.
Ellie Behling, reporter
ebehling@www.globalcustodian.com