Regulator Predicts Doom And Gloom

Deficits are on the way back up again; and risk management, employer covenant strength and investment strategy are once again thrown into sharp focus for pension scheme trustees...

Last month the Regulator issued its third annual Funding Statement and a separate evidence and analysis document.  The Funding Statement is accompanied by two reports which provide analysis on: (i) the position based on schemes with effective valuation dates between 22 September 2012 and 21 September 2013; and (ii) the position that the Regulator expects to see in relation to schemes with valuation dates between 22 September 2014 and 21 September 2015.

The headline message isn't great: "for many schemes, liabilities have grown faster than assets since their Tranche 7 valuation, resulting in increased deficits".  This has happened despite most asset classes performing well in the period, and can generally be attributed to record low consumer price inflation, gilt yields and interest