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Ritchie in bond strategy to beat pension deficits

Faculty of Actuaries president Stewart Ritchie is urging financially strong companies to issue long-dated bonds to fund their pension deficits and provide investments for other ailing pension schemes.

Setting out his agenda for his two-year term in office, Ritchie says this would be a win-win strategy for pension funding.

He says it would be a cheap and tax-efficient way for strongly performing firms to reduce their pension deficits and would create an additional source of high-quality corporate bonds that other companies could invest in.

Ritchie says a major concern is that many firms see their pension deficit as an interest-free loan and are reluctant to reduce it.

He says actuaries must help find solutions to provide financial stability, for example, by constructing longevity bonds. He adds that more work must be done to ensure employees and employers understand the implications of shortfalls in defined-benefit schemes.

Ritchie says: “If there is a problem, then it is better that consumers understand it, otherwise, they will not be in a position to take remedial action. This is not necessarily leaving the scheme in panic but it might be to ask the employer what it is doing to fill the black hole or starting additional saving.”


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US financial services giant MetLife plans to take on the UK market in January with a guaranteed income retirement product.It will aim at the increasingly competitive market for people who do not want to buy an annuity but are not prepared to take the risk of income drawdown.The funds will be invested in around 20 […]

Concern that pension reforms will fail to end means-testing

Radical changes to the basic state pension were announced in the Queen’s Speech last week along with a delivery authority to advise on personal accounts.The speech outlined plans for a pension reform bill which will restore the link between the basic state pension and earnings, raise the state pension age to 68 by 2046, reduce […]

Swiss Re attacked after calls to review cancer definitions

Royal Liver has criticised Swiss Re after it asked the Association of British Insurers to review its cancer definitions.IFA market manager Andy Milburn says changing the ABI’s standard definitions would create two-tiered cancer cover because Royal Liver and other providers have already implemented, or are in the process of implementing, the new definitions.Milburn says the […]

Public should pay levy

The Financial Services Compensation Scheme has announced that compensation for customers of Berry, Birch & Noble has been capped at 48,000 and that they are one of 80 firms declared in default in the FSCS’s latest declaration, Customers (they mean clients) of each firm will be eligible for up to 48,000 compensation, FSCS chief executive […]

'Feeling the Squeeze'

Royal London carried out a UK wide survey with 2,500 consumers age 35-44 over the summer. The survey found that over a third, 34 per cent, said their finances felt Squeezed and so were struggling to meet day-to-day expenses, despite 87 per cent being aware that they need to save more. However, the survey did […]


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