According to the 11th edition of the Purple Book, trends in DB pensions have stabilised within this past year, bumping the future of defined benefit pensions way up on the public agenda.
In the last twelve months, the data shows that scheme funding has changed ever so slightly. Overall, the aggregate deficit fell a few points while the aggregate funding ratio increased very little.
The Purple Book was published on 8th December 2016 by the Pension Protection Fund (PPF) and covers the 5,794 DB pension schemes it protects. Most of the data is based on information from any eligible DB schemes and analyses performance from 1st April 2015 - 31st March 2016.
Most of the change in habits is found in asset allocation with the average allocation invested in bonds increasing to over 50% for the first time ever. On the flip side, the proportion invested in equities fell slightly from 33% to 30.3%, which continues to drive a trend that was seen since the Purple Book was first published.
Human resource experts unanimously agree that 2016 has been very interesting for defined benefit pensions, also agreeing that more needs to be done to instigate progress. The average recovery plan length has barely improved at all.
Overall, the Purple Book 2016 does a great job of highlighting the need for effective risk management and also affirms the importance of the PPF safety net for members of schemes who fail to pay exactly what they promised to pay.
