The latest buzz phrase in DB regulation

The Pensions Regulator(tPR)’s statement this year introduced the phrase “Integrated Risk Management”. The word “integrated” in fact was used on 4 separate occasions in the statement. I stumbled across another tPR document recently, the 2013 occupational pension scheme governance survey. It seems clear that “Integrated Risk Management” is the buzz phrase of DB pensions regulation at the moment as it also formed a significant part of this survey.

There were a few interesting things in the results of the survey in the section about “Integrated risk management in DB schemes”.

Rather shockingly 11% of those surveyed didn’t know if there was any integration of risk management and the employer covenant. Given the survey was aimed at trustees this seems rather high!

But, even more shocking in my view, were the results for the “aims of the scheme’s journey plan” (not heard of a journey plan before – another option to flight plans, and glide paths I guess!). This showed that:

Only 88% had an aim to pay members’ benefits!

Isn’t this the primary purpose of the pension scheme? It was at least the most popular answer with “progressively derisking” coming in second at 78%. But why would any scheme not have an aim to pay member benefits?

If this is the results of Integrated Risk Management then we really need to get back to basics and remember what pension schemes are for.

Advertisements