Almost half of the delegates attending the 2007 Pension Summit said that it is now “too late” when it comes to the UK Government encouraging employers to maintain their defined benefit (DB)/final salary schemes.
46% of delegates attending the event – organised by BNY Mellon Asset Servicing and ABN AMRO Mellon Global Securities Services B.V. and attended by representatives from 70 leading UK pension schemes – believe that the shift away from DB schemes is irreversible.
A further 3% answered that there was ‘nothing’ the Government could do. Of the remaining delegates, 25% said the answer lay in deregulation and the other 25% opted for less government intervention.
73% of the 120-strong audience also agreed that it is getting harder to find and retain trustees. 40% already had an independent trustee on their board, the survey showed.
The audience was split on the subject of Personal Accounts. While 46% agreed that Personal Accounts will lead to a ‘levelling down’ of their company schemes, 54% disagreed. Of those that agreed, 33% of delegates felt the ‘levelling down’ process would occur within the next five years; another 33% said it would occur within 10 years; 10 per cent said the timeframe would be eight years.
As for the use of alternative investment classes by pensions schemes, 83% of delegates said that 4% or higher of their portfolio was allocated to these instruments. Property-based instruments were the most widely used, followed by derivatives products and private equity.
74% of delegates said they were either definitely, or at least contemplating, increasing their exposure to alternatives in the next 12 months.
“This survey, based on direct input from major UK pension funds and their trustees, confirms that life in the pensions sector is today far more complex and challenging than was the case a decade, or indeed even five years, ago. The role that asset servicing providers have to play in partnering with and advising schemes, their trustees and managers has accordingly never been more important,” says Nigel Taylorson, head of pensions, UK & Ireland, ABN AMRO Mellon.
“Whilst our audience see DB schemes as having a limited life expectancy – reflecting a recent poll undertaken by the NAPF – there is no doubt that the industry would seize any lifeline to save such schemes, were one to materialise, as DB is still seen as a far better solution to pensioners’ long-term needs than DC,” adds Mark Bewick, Relationship Management, UK Pensions, BNY Mellon Asset Servicing.