The National Association of Pension Funds (NAPF) commented on the statement published by the Pensions Regulator today to help Defined Benefit (typically final salary) pension schemes, in the current difficult economic environment.
NAPF Chief Executive, Joanne Segars, said: “Tough economic conditions, QE and falling gilt yields have been causing a huge headache for companies providing defined benefit pensions, many of whom have seen their pension deficits go up significantly. Pension trustees and those running pension schemes have a difficult job. The Pensions Regulator’s statement will help by giving some much needed clarity on what they expect from them and the employers who are going through their valuations.”
“It is good that that the Regulator will look sympathetically on employers that have experienced significant deficit increases by allowing extensions in recovery periods and, in some cases, allowing recovery plans to take on board any potential improvements in economic conditions. However, as the negative growth figures this week have shown, the outlook for the economy remains highly uncertain and there is the possibility that more QE will unfold. Whilst the Regulator is optimistic that the majority of pension schemes will not need to make significant increases in their contributions, it will need to stand ready to adjust its expectations if the real experience of pension schemes turns out to be far worse.”
“While the Regulator’s statement is helpful, we hope that its dealings with pension funds and their employers are consistent with what it has outlined. Ultimately, the proof of the pudding will be in the eating.”
Press release
© NAPF - National Association of Pension Funds
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