In this episode of The Professional Investment Podcast I’m joined by Shalin Bhagwan, chief actuary at the PPF. He chose the news of there being a low likelihood the PPF levy would be reinstated if it is cut as his story of the week.
We look at the state of the UK’s defined benefit industry when the PPF was established two decades ago. Back then pension schemes funding positions were highly volatile and deficits about to balloon in the aftermath of the financial crisis. Scroll forward 20 years, and the PPF now has reserves of £14 billion.
Although we are now at a very positive point with the strength of the industry and the PPF at the point where the levy can be reduced to zero, there are still issues which need to be solved.
The DB pension landscape remains highly fragmented with many of the smallest schemes still in deficit. Shalin explains how the PPF is well placed to help these schemes.
We also delve into the run-on versus buy-out debate and different options which could help more schemes to pursue buy-out. We talk about the investment implications of this trend and how pension schemes should embrace the greater investment flexibility they have compared with insurers.
Finally we talk about how we should address pension adequacy and the challenges of retiring with a pot rather than an income.
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