The combined defined benefit (DB) pension deficits of the FTSE 100 run the risk of an increase of over £25bn within one month, according to a new report published by pension risk analysts PensionsFirst. Over a year, this could result in an increase of around £100bn in the total deficit, potentially taking the deficit to over £140bn (the current deficit stands at £43.5bn across the FTSE 100). According to the report, however, the main risk for the UK’s largest companies is the fact their exposure to market volatility remains unhedged.
“For several years the media and the pensions industry have focused on pension deficits, but we believe the real issue is the volatility that sits beneath the headline numbers, and in publishing the PF Risk Report we are seeking to shift the debate to the far more important issue of risk,” said PensionsFirst Analytics chief executive officer (CEO) Benjamin Reid. “This is a serious issue for all stakeholders – including pension scheme members and shareholders – because unhedged pension liabilities can result in significant exposure to market-directional risk.”
The report indicates that many UK companies (not just those in the FTSE-100) are running market exposures similar to hedge funds alongside their core business. However, unlike hedge funds, which are specifically mandated by their investors to take market exposure, most companies are ill-equipped to manage the high levels of financial market volatility embedded in their pensions schemes and shareholders typically have little information on the risks to which they are consequently exposed.
The annual BNP Paribas Cash Management University kicked off on Thursday morning with treasury professionals congregating in Paris from across Europe.
APIs may be a solution to MT940 challenges, says Karen Fagan, treasury operation manager, for British television company, ITV.
Kicking off the first day of the Singapore Fintech Festival, issues with cryptocurrencies were addressed by MIT media labs director, Joi Ito, and panels of technology leaders discussed how they’re using data analytics.
Sibos 2017 day two highlights: Brexit and banking, and why ‘data is the new oil’ in financial services
How nation first politics can impact global financial organisations It’s clear that data and regulation are the two key topics that are ... read more