Press Releases

Commenting on the revised DB funding and investment regulations published today, Laura McLaren, Head of DB Actuarial Consulting, Hymans Robertson, said:

“The regulations have some welcome changes while keeping the same framework. The updates have addressed some of the biggest concerns, including inconsistencies with the draft code of practice. Changes to reflect the government agenda to encourage scheme investment in productive finance, means fears that some schemes would be hemmed in, or herded towards very narrow low-risk investment strategies, have been reduced. A fixed basis for maturity will help schemes map out their funding and investment strategy with a clear target date that won’t jump around with market conditions...

Over two thirds (68%) of corporate sponsors of DB pension schemes said it’s likely that they’ll increase their use of professional trustees in the future, according to a survey by Hymans Robertson. The research also found that over two thirds (70%) of companies expect to review their trustee boards at least every six years or less. The leading pensions and financial services consultancy welcomed these findings, as schemes will need boards with expert skill sets to meet the expectations of TPR's new General Code, and the evolving sophistication of endgame strategies. These changes are likely to see schemes focus on governance models utilising more specialist skills sets and trustees with operational experience of delivering complex projects such as buy-in to buy-out strategies.

Commenting on its response to the Government’s pot for life consultation, Paul Waters, Head of DC Markets, Hymans Robertson, said:

The lifetime provider model - so-called ‘pot for life’ - does not tackle the savings adequacy challenge for DC savers. The government’s proposal risks making the situation worse by placing more responsibility on savers and away from employers, without addressing how overall savings rates will be increased. Many DC scheme members lack the financial education and confidence to choose their own pension provider. The pot for life model risks members making poor decisions based on the cheapest or best marketed solutions, rather than those offering the best value for money.

Commenting on expectations for Consumer Price Inflation (CPI) in December 2023 to be announced tomorrow (Wed 17^th Jan 2024), Chris Arcari, Head of Capital Markets, Hymans Robertson, said:

“Consensus expectations are for headline CPI inflation to have eased a little to 3.8% year-on-year in December, from 3.9% year-on-year in November...

IFAs need to use outcomes-based analysis as a standard part of their retirement income planning process instead of relying on averages. Without this approach they could struggle to meet new requirements in the FCA’s thematic review of retirement income advice, warns Hymans Robertson Investment Services (HRIS). HRIS further warns that reliance on averages when making assumptions could lead to an incorrect prioritisation of certain information. This in turn could result in clients facing significant shortfalls in retirement.

 Comment on the much-delayed TPR General Code laid before Parliament today.

Hopes for DC and DB Pensions in 2024 from Hymans Robertson.

DC pension members could increase retirement incomes by as much as 20%¹ if new risk sharing options were made available at the point of retirement, according to analysis from Hymans Robertson. The leading pensions and financial services consultancy says innovative change is desperately needed to solve the ‘decumulation puzzle’ facing DC members. It’s calling on the government to unlock the opportunity through two specific policy interventions: allowing providers to default members into decumulation retirement plans and creating a broader, more permissive regime for retirement risk sharing rather than focusing solely on CDC as the answer. A default retirement model would allow the industry to harness inertia and quickly gain scale for new risk sharing ideas that could deliver better member outcomes, rather than just trying to solve it through central government design of CDC.

Providers risk unnecessary operational issues, if they get caught up in the ‘AI bubble' and implement Artificial Intelligence (AI) before they’ve updated their current digital systems and processes, warns Hymans Robertson. Research from the leading financial services consultancy shows that more than three-quarters (76%) of senior leaders at insurance providers say they currently interact with AI daily and almost half (48%) even say they’re currently planning to develop their own AI for their organisation...

A number of new insurers are expected to enter the bulk annuity market, attracted by the record-breaking numbers and volumes of transactions.  New entrants give more power of choice to trustees, but also raise some questions, says Hymans Robertson.  Transaction records in the risk transfer market are expected to be broken in 2023 and the years to come.  The leading pensions and financial services consultancy emphasised that the opportunities brought by such strong demand are attracting the attention of insurers that are not already in the market.  M&G re-entered the bulk annuity market in 2023, making it the first new entrant since 2017*.

Commentary on Chancellor Jeremy Hunt's Autumn Statement 2023.

Commenting on the Chancellor's British Business Bank pensions investment plan, Alison Leslie, Head of DC Investment, Hymans Robertson, said:

“Whilst we welcome initiatives which expand the investment universe and support savers, it will take some time for the initiative to be commercially viable for many pension arrangements. Over time however we think this is a welcome addition to the universe of investments available for DC savers focusing specifically on the UK. If the investment case stacks up, like any investment, it would in time be considered as part of the investment universe but the rationale and returns have to bear fruit.”