35% of CFOs see sustainability as defined benefit pension scheme end goal

Pension pot

More than a third (35%) of chief financial officer (CFO) respondents cite scheme sustainability as the end goal for their organisation’s defined benefit (DB) pension scheme, according to research by Hymans Robertson.

The survey of 100 pension trustees and 51 CFOs at organisations with more than 1,000 employees also found that 25% of CFO respondents would rule out a medically underwritten buy-in over the next year, while 92% of pension trustee respondents would reject this option.

The research also found:

  • 29% of CFO respondents are targeting an insurance buy-out as the ultimate goal for their organisation’s DB pension scheme. Just 15% of pension trustee respondents have the same goal.
  • 63% of CFO respondents would like to start working towards a buy-out this year, compared to 9% of trustee respondents.
  • 16% of CFO respondents want to achieve self-sufficiency by investing scheme assets in a similar way to an insurer.
  • 78% of trustee respondents rule out a longevity swap in the next year, compared to 25% of CFO respondents.
  • 27% of CFO respondents believe having a clear understanding of scheme risks and knowing when to de-risk is a key challenge.
  • 31% of CFO respondents feel that pension trustees do not share their objectives.

Jon Hatchett, head of corporate consulting at Hymans Robertson, said: “With one in seven CFOs considering their DB scheme to be one of the biggest risks to their business this year, it’s no surprise that solving the DB pensions problem is a key priority for CFOs.

“Brexit has only exacerbated the challenges most schemes face. The high profile pensions problems at BHS, Halcrow and Tata Steel are raising this up the agenda and putting pressure on the industry to find solutions.”