LCP: COVID-19 has limited impact on DB schemes’ funding levels

By

first_imgSome 60% of sponsors had reported an accounting surplus in their pension scheme on an IAS19 (International Accounting Standard 19, Employee Benefits) accounting basis for 2019, rising to 70% in surplus – their best position for 20 years – by March this year.However, just one month later, that figure had fallen below 60% again as the pandemic hit.Moreover, the LCP analysis reveals that between 10 March and 18 March, debt-market volatility and rising interest rates wiped some £150bn (€167bn) from the total pension liabilities as investors sought shelter in fixed income.The development effectively balanced out Q1’s precipitous falls on global equity markets.The LCP study noted that two factors have served to shield FTSE 100 scheme sponsors from the worst effects of recent market turmoil.First, their combined asset holds are currently split 60/20 in favour of bonds over equities. This compares with the position in 2002 when just over 60% of fund assets were allocated to equities and less than 30% to bonds.Second, funds with extensive hedging strategies in place will have seen their liabilities reduced.Meanwhile, the key IAS 19 assumptions of discount rates, inflation and mortality, have also seen noteworthy developments.Since 31 December 2018, discount rates have fallen from around 2.8% to between 2% and 2.1% at 31 December 2019, which has had the knock-on effect, in isolation, of increasing scheme liabilities by around 15% – some £70bn for FTSE100 sponsors alone.InflationOn inflation, sponsors based their IAS 19 assumptions on a breakeven inflation assumption of some 3.2% less an inflation risk premium of between 0.2-0.3%.This risk premium is slightly higher than in previous years. The report’s authors suggest it could “be as a result of the increased uncertainty in the market and the perception that perhaps investors require additional returns if they were to hold inflationary risks in the current climate.”The report also noted that sponsors were beginning to adapt their IAS 19 assumptions to Retail Price Index inflation reform in the UK, which will eventually see the measure replaced with the CPIH measure.But, cautioned the report, the impact of that reform remains, however, uncertain.MortalityOn the third key assumption – mortality – the study revealed some disparity among sponsors over mortality assumptions.Although a clear majority in a sample of 45 samples had updated their mortality assumptions to take account of the latest developments in the CMI 2018, a significant minority relied on earlier iterations of the CMI dating back to 2013.The report disclosed that this introduced a level of subjectivity into the reporting that they value at some £50bn.The report focused on the DB net balance sheet position in the sponsor’s year-end financial statements. It did not take in the funding position, which represented a cash call on the sponsor.DividendsFinally, on the now contentious topic of dividend payments to shareholders, the report said that around one-third of FTSE 100 companies had either cancelled or deferred planned dividends.This move comes not just as a result of the COVID-19 outbreak but also in the face of growing pressure from the UK Pensions Regulator to strike an equitable balance between the interests of shareholders and pension scheme members.Most recently, the regulator had insisted that sponsors could only suspend or reduce deficit contributions if they halted dividend payments.LCP’s full report can be viewed here.To read the digital edition of IPE’s latest magazine click here. The coronavirus pandemic has so far had a limited impact on the net funding position of UK FTSE 100 defined benefit (DB) pension schemes, a new report from consultants Lane Clark & Peacock (LCP) has revealed.The study shows that the near total shutdown of the UK economy in response to the COVID-19 outbreak has left funds treading water to end March broadly in the same position as at the start of the year.LCP partner Jonathan Griffith said: “Before the economic earthquake of COVID-19, a large number of FTSE 100 pension schemes were in a relatively healthy position, with most reporting a surplus in their company accounts.“The pandemic has thrown all this up in the air as discount rates and asset values are impacted by the market volatility.”last_img read more

Wildcat Netters Participate At Richmond Invite

By

first_imgFranklin County High School Boys Varsity Tennis finishes 5th place at Richmond High School Invite.Round 1:#1 Singles Jack Stirn 6-0, 6-1 vs. Caleb King (Pendleton Heights)#2 Singles Brant Ertel 0-6, 1-6 vs. George Dickman (Richmond)#3 Singles Landen Wuestefeld lost in third set vs. Seth Spurlock (Connersville)#1 Doubles Kurt Oetzel & Lonnie Schwartz 7-6 (8-6), 2-6, 0-1 (3-10) vs. Zach Bovard & Max Daniels (East Central)#2 Doubles Will Wade & Evan McMillin 0-6, 0-6 vs. Dallas Turner & Owen Koon (Mt. Vernon)Round 2:#1 Singles Jack Stirn 6-0, 6-1 vs. Chris Hays (Mt. Vernon)#2 Singles Brant Ertel 8-2 vs. Zach Nelson (Pendleton Heights)#3 Singles Landen Wuestefeld 8-3 vs. Tanner Townsend (Muncie Central)#1 Doubles Kurt Oetzel & Lonnie Schwartz 8-0 vs. Onnie Adams & Austin South (Muncie Central)#2 Doubles Will Wade & Evan McMillin 4-8 vs. Tristan Galeon & Nihal Nagerh (Marion)Round 3:#1 Singles Jack Stirn 0-6, 2-6 vs. Vikram Oddiraju (Marion)#2 Singles Brant Ertel 5-8 vs. Logan Huismann (East Central)#3 Singles Landen Wuestefeld 0-8 vs. Reece Powell (Mt. Vernon)#1 Doubles Kurt Oetzel & Lonnie Schwartz 8-6 vs. Justin Lempke & Jackson Dunlavy (Mt. Vernon)#2 Doubles Will Wade & Evan McMillin 8-0 vs. Skylar Vestal & Braxton Mercer (Muncie Central)Courtesy of Wildcats Coach Dylan Little.last_img read more

PLB releases schedule of televised Premier league matches

By

first_imgThe Premier League Board of the Ghana Football Association has released a schedule of televised Ghana Premier matches from match day 10 up to the end of the first round.The match between reigning champions Asante Kotoko and Liberty Professionals will be televised live on Supersport from 3.15pm (KO) on Saturday November 2 whilst the match between Hearts of Oak and King Faisal in Accra will be televised live on Supersport on Sunday November 3, also from 3.15pm (KO).Below is the full schedule of televised matches in the Ghana Premier League for the rest of the first round. Match day 10November 2 2013 Asante Kotoko v Liberty Professionals – KumasiNovember 3 2013Hearts of Oak v King Faisal – AccraMatch day 11November 9 2013 Medeama SC v Aduana Stars – TarkwaNovember 10 2013Dwarfs v Wa All Stars – Cape CoastNovember 11 2013Liberty Professionals v Inter Allies – Accra Match day 12November 13 2013Hearts of Oak v Medeama SC – AccraMatch day 13November 30 2013 King Faisal v Inter Allies – KumasiDecember 1 2013Ashanti Gold v Hasaacas – ObuasiMatch day 14December 7 2013 Berekum Chelsea v Liberty Professionals – BerekumDecember 8 2013Bechem United v Ashanti Gold – BechemMatch day 15December 14 2013 Medeama SC v Inter Allies – TarkwaDecember 15 2013Dwarfs v Asante Kotoko – Cape Coastlast_img read more