Mon, 12/11/2012 - 13:38
Nearly three quarters of trustees surveyed (71 per cent) feel that the amount of legislation and pace of change in the pensions industry is too much, with nearly half (47 per cent) saying they are hindered in performing their duties as a trustee, according to research from MetLife Assurance.
MetLife Assurance’s research showed that trustees of schemes with assets above GBP250m were more likely to state it hindered them in their duties (53 per cent) while trustees for smaller pension schemes with below GBP250m were more likely to state that legislation helps in their duties (20 per cent).
Wayne Daniel, chief executive officer at MetLife Assurance, says: “It is concerning that some trustees feel they are being hindered in performing their job as a trustee, in particular due to the amount of legislation and pace of change. The fact that trustees of larger schemes worry about being able to perform their duties may hinder their efforts to find appropriate de-risking strategies that fit the unique needs of their scheme.”
The study further reveals that the prioritisation of de-risking by trustees remains high: two-thirds of trustees surveyed (65 per cent) reported that the priority of de-risking in the context of the overall business objectives had remained the same over the course of the previous 12 months. Less than one in five surveyed (18 per cent) said de-risking had become a greater priority in the last year and 15 per cent said the priority was now lower. This represents a significant shift when compared to the 2010 survey results, where nearly two out of three trustees surveyed (64 per cent) said their pension scheme priority had increased compared to the previous year and only 28 per cent believed it had remained the same.
The research showed roughly two thirds of the trustees surveyed (66 per cent) have a plan in place to de-risk their company pension in the next five years - however, over one-third (37 per cent) admitted to being “not very” or “not at all” prepared to engage in a de-risking provider selection process.
Daniel says: “There is an evident lack of knowledge by trustees of how to prepare for a de-risking exercise even though two thirds are planning to de-risk the company pension scheme in the next five years.”
Reassuringly, the overwhelming majority (92 per cent) of trustees surveyed said that they shared the responsibility for de-risking with the employer, increasing from 85 per cent in 2010. Indeed 93 per cent felt that they receive enough assistance from the sponsoring employer to support their search for knowledge. Interestingly, retirement was cited as the overriding reason for the majority of trustees surveyed who expect to leave their position (57 per cent).
Daniel says: “Acceptance and realisation of responsibility for de-risking a company pension scheme coupled with the majority feeling that they have the required level of training and support, signals a strong future for the working relationship between employers and trustees.”
The research by MetLife Assurance showed that consideration of different de-risking strategies increased compared to the 2010 results for the range of options presented. Significant rises can be seen for liability driven / asset risk strategies, from 48 per cent to 70 per cent, data cleansing from 10 per cent to 39 per cent and member options from 5 per cent to 29 per cent. Consideration of longevity risk hedging also increased from 30 per cent to 48 per cent, while those considering either buy-in or buyout increased only marginally from 34 per cent to 39 per cent.
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