Hear from Bob Scott and Zoe Burdo as they talk about hot topics that they covered in our Annual pensions conference. You can access all of our conference video on demand by clicking here.
2022 has seen many changes and upheavals. Three Prime Ministers, four Chancellors and changes of cabinet ministers too numerous to count have led to sudden and dramatic changes of political direction. Rapidly rising inflation - one of the unwelcome legacies of the Covid lockdowns – and rising interest rates have meant challenges for many people and businesses. The country is officially in recession.
And yet, 2022 has also seen the fortunes of many pension schemes improve: those that cap pension indexation (typically at 5% pa) have not felt the full force of recent high inflation; higher yields have meant improved funding levels for many schemes; and lower life expectancies mean that pensions are less expensive to provide.
It was against this background that the theme for our 2022 conference was “Staying ahead of the curve – making the most of volatile times for your pension scheme”.
Hannah Fry, mathematician, author and TV presenter (pictured) opened the conference with a talk on “The Power of Data”. Hannah regaled the audience with tales of cows wearing fit bits, genetically identical crayfish and failed rocket launches and showed how important it was to focus on the right data.
Jonathan Camfield helped us to make sense of the macroeconomic climate and the “new normal”. Jon highlighted that, although 2022 had been favourable for many pension schemes, the outlook was not so rosy for pension scheme members, particularly those who rely on defined contribution savings for their retirement.
Natalie Brain explained the “LDI” issue and suggested that, in the new normal, trustees and employers would need to decide whether they wanted a higher level of hedging or a higher level of growth assets. It was no longer possible to have both.
Pricing in the bulk annuity market has been very favourable in 2022. David Alward highlighted that some £1 trillion had been wiped off private sector pension liability values over the year - this compared with reported falls in asset values of £500 billion as a result of the LDI issue. David explained how trustees and employers could make their pension scheme attractive to insurers and thereby benefit from current favourable pricing.
To wrap up the first half of the conference, Jamie Harding looked at how trustees and employers could work together to make the most of improved funding levels, whilst avoiding unwanted surpluses and having regard to the position of pension scheme members too.
Hannah Fry
After a light-hearted look at the serious subject of member communications and independent financial advice, we changed gears and looked at some of the wider aspects of pension provision. First up was John Parnis England who explained that climate risks were an immediate issue for employers, not something that would materialise over the next 50 years. John showed how climate considerations could be incorporated into covenant assessments.
Next, Laasya Shekeran and Katie Walker brought the house down with their passionate session on “The Power of Pensions”. Laasya and Katie showed how the influence of the pensions industry reached far and wide, from individual members to companies and industries, through governments and to the whole planet. They urged delegates to use their power for good and to ensure that they had the right governance structures in place to do so.
The final session saw Jonathan Pearson Stuttard discussing the longer term effects of the Covid lockdowns in a “fireside chat” with Stuart McDonald. More deaths than expected, widening inequality and delays in diagnosis and treatment of serious illnesses all meant that 2023 pension scheme valuations could show a reduction in liability values of up to 3%. The hard data now backed up what Jonny had told our 2020 conference – that, from an epidemiological perspective, the legacy of the lockdowns would be higher mortality rates in the long term.
So, from the power of data to the power of pensions and plenty in between. Our 2022 conference drew to a close and delegates were invited to enjoy our hospitality at the winter party.
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