First DB Risk Survey for 2019 reveals fears of Brexit and General Election have fuelled employer covenant risk concerns

PTL, the leading independent trustee and governance services provider, today announced the results of its latest DB Risk Survey.  With the threat of Brexit and a possible General Election hanging over the UK, concern about the potential impact on employer covenant risk has increased since respondents were last questioned.

The survey, which has been running since July 2017, asks respondents to indicate the top three risks facing DB pension schemes at a current point in time.

Risk survey February 2019

Richard Butcher, Managing Director at PTL, said: “Our first round of results for 2019 has uncovered some fascinating findings.  At first sight, it’s surprising that a possible change of government has only had an uptick of just over 2% despite it being far more likely in January 2019 than it was in October last year, while Brexit investment implications is down by just a fraction.  But don’t take these results at face value.

“In June 2017, one year after the European Referendum, concerns about employer covenant risk were at around 14%, but fast forward to the start of this year with an exit from the EU on the horizon but no deal agreed, and that figure has risen to 26%.  While direct concerns about Brexit and Government are not rising significantly, the things that they impact are. It’s clear that the unclarified terms of Brexit are causing an ever-increasing circle of uncertainty over everything in its path.

"Inflation concerns are down massively versus 18 months ago when we were still in the midst of so called ‘project fear’ post the Referendum, perhaps as the Brexit train continues to trundle along and nothing much really changes.  Thankfully GDPR and cyber security concerns are down – GDPR is now behind us in terms of stepping up to the plate to meet the standards laid out, while a bold response from the media and industry on cyber security ensured the threats were laid bare. Pension savers, members, trustees, employers and schemes were able to educate and be educated, and take action as a result.

“Also interesting is the fact that concern around compulsory scheme mergers has almost doubled. The Department of Work and Pensions has recently expressed support for the idea but here hasn’t yet been a clear description of the regime that will apply to superfunds. Given that risks could exist, compulsion would seem a bold policy outcome.”

We will continue to run the survey every quarter. If you’d like to be involved in the next quarterly risk survey, please contact info@ptluk.com.  

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