Since June 2012, under the Occupational Pension Schemes (Disclosure of Information) Regulations 2006, trustees of schemes which are subject to the statutory funding standard are required to submit an Annual Actuarial Data Return each year. Details of the Return are set out in the Disclosure Regulations which must be completed by the scheme actuary and submitted to the Pensions Authority within 9 months of the end of the scheme year.
In the period up to 31 March 2016, the Pensions Authority received 699 Returns and has now published a summary of the information. A copy of the summary is available here. Points of particular interest include:
- Out of the 699 schemes to which the Returns related, 33 were in wind-up and 163 were frozen.
- Excluding the schemes in wind-up, the scheme liabilities were estimated in the region of €58.5 billion.
- The membership profile of the continuing schemes’ were made up of 15% pensioners, 19% actives and 66% deferreds (which includes persons still in active service but no longer accruing benefits).
- 30% of the continuing schemes did not meet the statutory funding standard at the date of submission of their Return.
- The average funding level of those schemes that do meet the statutory funding standard is 115%.
- Of those that do not meet the funding standard, there were 9 schemes at the end of 2015 which had not put in place a funding proposal and in respect of which the Pensions Authority was considering taking action.
- There has been a reduction in investment in equities and an increase in investment in bonds across the board. 35.8% of continuing schemes’ assets are invested in equities (down from 41.7% based on the previous Returns) while 41.8% is invested in EU sovereign and other bonds (up from 38.2%).
The Pensions Authority noted in its commentary that there was “disappointingly little evidence of significant de-risking of DB assets over the year”. In addition, it states that the Pensions Authority “continues to be concerned at the lack of evidence of proper risk measurement and management within DB schemes”.
As outlined in previous posts (please see here), the Pensions Authority is ramping up its engagement with trustees of defined benefit pension schemes with a focus on the Pensions Authority’s financial management guidelines. Clearly, the level of investment risk which schemes are carrying (and the reasons why) will be a key issue for both trustees and the Pensions Authority to consider in any such engagement.