The Gorilla in the Garden

For companies with one or more of the 7,000 or so defined benefit (DB) pension schemes in the UK, now is the time to get to grips with the risks. A combination of equity performance and a reduction in corporate bond interest rates has led to a shift in defined benefit accounting disclosures. The FTSE 100 has moved from a small surplus before the credit crunch began in mid 2007 to a deficit of around £73 billion as at the end of June 2010 (according to JP Morgan).

Richard Farr, BDO Pensions, supported by comments from the Critialeye Community, looks at the issues for management, trustees and banks and explains why an unattended DB pension scheme is as risky as ignoring the 200kg gorilla in your garden.