Post-truths about 2016
Editorial: The year that is coming to an end might be remembered in the pensions industry as one of referendums and defined benefit battles.
The latter have increased in intensity, with the debate about affordability or otherwise of DB sometimes resembling the EU referendum campaigns, where emotions mattered more than facts. Big numbers are used to illustrate the dire or prospering state of employers and schemes alike, but there is often a question mark around which numbers are being focused on and what parameters are used and assumptions made for calculating them.
For example, in our article on the Purple Book 2016 figures, the PLSA says the cost of providing DB pensions has risen by 37 per cent and employers are running just to stand still, pouring billions into schemes with seemingly immutable deficits. At the same time, others point to growing dividend payments in comparison to pension contributions.
Illustration by Ben Jennings
Allowing partial transfers has been suggested as a solution, but letting members walk into the defined contribution wilderness comes with its own problems, as the article about the OECD’s latest Pensions Outlook notes.
Putting investment and longevity risk on individuals’ shoulders could be a recipe for disaster. But as the deed of allowing pure DC has been done, the industry and employers must do their best to help those in DC schemes through high-quality investments, life-long education and low-cost advice – topics that will undoubtedly come into the spotlight again next year.
As trustees look back on 2016, they agree it was a year of the unexpected, with both the Brexit vote and the election of Donald Trump to US president coming as a surprise. French and German elections are both due next year, so there could be more shocks to come. With so much change, a few quiet weeks might be welcome; and so we wish all our readers a very happy festive season.
We look forward to bringing you news and analysis with the magazine again next year as Pensions Expert is taking a print break over the holidays. The magazine will be back on January 16 2017. In the meantime, we will continue to update you on www.pensions-expert.com.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWK and the team @pensions_expert.