Reports and Briefing Notes

Pension scheme assets – how they are invested and how and why they change over time

We know both ‘quite a lot’ and ‘not enough’ about the assets that back current and future retirement incomes. Quite a lot because there are several sources of data that map pension fund assets and the way in which they are invested. Not enough because there are gaps in our knowledge and a multiplicity of data sets that classify assets in slightly different ways. The timing of different reports can also create difficulty mapping assets consistently as asset values change all the time!

One reason for the lack of data or consistency lies in the multi-layered system for pension provision in the UK (over and above the state pension). Further confusion can arise because:

• the assets in a hybrid DB/DC scheme are sometimes aggregated in data sets with the DC section not included in DC analysis;
• the assets of many trust-based pensions sit with insurance companies;
• buy-in bulk annuities of DB schemes are assets of the DB scheme but backed by assets that sit in the life company.

Moreover, the landscape of pension schemes is ever moving. DB schemes are wound up and the assets transferred to annuity providers, the PPF or a DB consolidator. DC arrangements can move from contract to trust based and significant consolidation has taken place which may in itself reshape the asset mix. 
 
The PPI is looking to shine a light through the mist and bring together data showing how pension scheme asset allocation changes over time, and why. Supported by a survey, this annual report will bring some much needed clarity to an opaque topic as well as supporting discussions with Government about how assets can be defined and reported in the future.

Press