The defined benefit “crisis” is being “vastly overrated”, Quantum Advisory has argued.

According to the benefits and actuarial firm, the increasingly discussed “crisis” in the DB pensions space is no greater a crisis today than it was a few years ago, and, “arguably, if anything DB has got better,” Quantum Advisory partner Phil Farrell said.

Farrell opined that while there are “large and scary figures” emerging from DB schemes, practice is currently more robust on trustee boards than previously, cohesive working between trustees and employers has improved and “it is now more transparent than it ever has been”.

In addition, Farrell stated that there is now “more planning, road mapping, strategizing and really thinking about what is to be achieved and how to get there.”

“Products are far better, solutions more innovative and importantly more accessible for schemes at the smaller end of the scale.

“Clearly there are still problems, with many hurdles to overcome and challenges to be addressed, but in the main we are in a better place with an ongoing desire for constant development and improvement, helping to address funding shortfalls. As an industry, we are practised at innovation driven by experience. The industry should work harder to eradicate the overly negative perception that surrounds DB pensions and better promote the positive progress made to date,” Farrell concluded.

Since the BHS pension scandal, people have become increasingly concerned about the sustainability of DB pension schemes. DB pension liabilities increased by 85 per cent over the last 10 years, reaching £625bn, LCP reported in its Accounting for Pensions 2017 report.

Nonetheless, the most recently recorded DB transfer values, as at end of July 2017, remained stable compared to transfer value volatility in Q2 2017, Xafinity reported.

Share Story: