Of interest to DB schemes is the ninth edition of the Purple Book, produced jointly by the PPF and the Pensions Regulator (TPR), which reports that the pace of DB scheme closure to new members slowed in 2014.
Over the 12 months to 31 March 2014, the Purple Book reports that:
- the proportion of schemes closed to future accrual rose from 30 per cent to 32 per cent continuing the “trend that has been in place since the start of the Purple Book in 2006”. The proportion of schemes remaining fully open fell only slightly, from 14 per cent in 2013 to 13 per cent this year;
- over the same period, the proportion of schemes that were closed to new members (but open to future accrual) fell from 54 per cent to 53 per cent;
- scheme funding improved from 84 per cent to 97 per cent on a section 179 valuation basis. On a full buyout basis the funding ratio grew from 61 per cent to 67 per cent, which TPR said reflected both the impact of higher gilt yields on liabilities and the impact of higher equity markets on assets;
- however, in the six months from the end of March 2014, scheme funding worsened by about nine percentage points, due to lower gilt yields.
Director of case management and intelligence at TPR, Geoff Cruickshank, said:
“As the Purple Book highlights, DB schemes remain a significant part of the pensions landscape, with over 11 million members in around 6,000 schemes and more than £1 trillion of assets. Our new objective to minimise any adverse impact on employer growth has helped focus our approach to DB schemes. There is no doubt that a fine balance has to be struck in order to provide security for pension schemes while at the same time giving employers flexibility to invest in business growth.”
The Purple Book monitors 6,057 mostly private-sector DB schemes. The full version can be accessed via the PPF’s website here.