PensionsDec 10 2015

DB closures have levelled out, Purple Book data

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DB closures have levelled out, Purple Book data

The percentage of DB schemes open to new members has remained stable at 13 per cent, according to the latest edition of the Purple Book.

Published by The Pension Protection Fund and The Pensions Regulator, the book found trends in DB pensions have remained stable.

The percentage of schemes that are open remained at 13 per cent in 2015 and has changed little over the last three years, hinting at a levelling off in recent years after a steep decline from 43 per cent in 2006.

Andrew Warwick-Thompson, executive director at The Pensions Regulator, said: “After a decade of dramatic decline, the DB landscape has reached a point of relative stability in terms of scheme status and membership.

“However, the impact of new pension freedoms will not be seen until next year’s Purple Book, and may yet shift the landscape again.

“We have entered a new phase and we call upon trustees and employers to work together to agree their long-term aims, and the best way to secure their members’ benefits.”

The number of active members fell by 3 per cent in 2015, to 1.75m.

Percentage of schemes201020112012201320142015
Closed to new members58%58%57%54%53%51%
Closed to future accruals21%24%26%30%32%34%
Winding up2%2%2%2%2%2%

According to the data, the aggregate s179 funding position of the schemes, as of 31 March 2015, showed a deficit of £244.2bn, the largest s179 deficit at an end March date since the establishment of the PPF.

Tony Hobman, chairman of the advisory board at London-based Lincoln Pensions, said: “There is not much to surprise in the latest Purple Book. As ever, it sheds light on ‘here and now’ issues as well as long-term trends.

“Scheme funding has continued to deteriorate and the challenge for trustees to manage covenant, funding and investment risks remains undiminished.”

Schemes have continued to de-risk by changing their asset allocation, meaning that between 2006 and 2015 the equity share of total assets fell from 61.1 per cent to 33 per cent.

Meanwhile, the gilt and fixed interest share rose from 28.3 per cent to 47.7 per cent.

Adviser view

Phil Stevenson, director of Cheshire-based Ark Financial Planning, said: “The public sector is not closing its DB schemes and the private sector ones are pretty much all shut now so that will be the reason it has stabilised.”