A report by Mercer Human Resource Consulting suggests that members of UK pension plans may soon find out that their funds are in worse shape than they thought.
New disclosure rules mean that schemes will have to send out letters over the coming days that present their members with the ‘ongoing’ value of their pension funds as well as the full insurance ‘buy-out’ value. According to Mercer, around 10 million statements are due to be issued.
According to the Mercer report, as quoted by Reuters, around one in five scheme members will find that they would receive only 50% to 60% of their pension if their scheme was wound up immediately and had to buy an insurance policy, while only one in five members would receive over 70% of their pension.
Dr Deborah Cooper, principle at Mercer, was quoted by IFAonline as saying: While trustees should not try to sugar coat the numbers to make them more palatable, it is important they put them into context for members. The statements represent a snapshot of pension schemes at a particular date, and the shortfalls in most schemes will continue to reduce over time.