Wednesday, January 30, 2013

UNISON Pension Guru Glyn Jenkins on "smoothing" and stop "destroying" schemes

This 5 minute video "head to head" by Professional Pensions sees UNISON Head of Pensions, Glyn Jenkins, debate the recently announced Government enquiry into "smoothing" with PWC partner Jeremy Way.

Most defined benefit schemes value the present and future cost of pensions by reference to the return of government loans called gilts. Due to current abnormal market conditions these gilt returns are at a 200 year low. This means that schemes appear to have huge and unstable deficits. The enquiry is looking into arguments that instead of valuing these liabilities according to gilts they should be valued in another more relevant way.

For example by reference to the actual historic and expected return of the assets that the schemes actually invest in, not a "make believe" world that they only invest in gilts. Most pensions schemes invest in other assets such as equities  (stock and shares) not just gilts and it is reasonable to expect a much better long term return from such assets than gilts.

If they did this then the size of so called current "deficits" in many DB schemes would be slashed.

Glyn believes it would make sense to consider all scheme assets not just gilts and that the current unrealistic and inflexible "herd" or "lemmings" approach is destroying schemes. Which is actually the view of the current Pensions Minster Steve Webb.

I'm not quite sure what the conclusion of the PWC "yes but no but" argument actually is, but check it out in the the video for yourself. I suppose 5 minutes is far too short for a definitive debate but it concentrates the mind.


Anonymous said...

Due to current abnormal market conditions these gilt returns are at a 200 year low.

Do youn mean "because Tony and Gordon went on a 10 year spending binge which fucked out country"?
No doubt you will censor this comment out as part of yopur commitment to transparanecy and free speech. Just testing.

John Gray said...

Hi Potty mouth anon

Wake up and smell the coffee anon. I know you lot are pretty thick and gullible but don't believe everything the Daily Mail prints for crying out loud. Have you no mind of your own? No self respect?