In this episode of The Professional Investment Podcast I’m joined by Shalin Bhagwan, chief actuary at the PPF. He chose the news of there being a low likelihood the PPF levy would be reinstated if it is cut as his story of the week.
We look at the state of the UK’s defined benefit industry when the PPF was established two decades ago. Back then pension schemes funding positions were highly volatile and deficits about to balloon in the aftermath of the financial crisis. Scroll forward 20 years, and the PPF now has reserves of £14 billion.
Although we are now at a very positive point with the strength of the industry and the PPF at the point where the levy can be reduced to zero, there are still issues which need to be solved.
The DB pension landscape remains highly fragmented with many of the smallest schemes still in deficit. Shalin explains how the PPF is well placed to help these schemes.
We also delve in the run-on versus buy-out debate and different options which could help more schemes to pursue buy-out. We talk about the investment implications of this trend and how pension schemes should embrace the greater investment flexibility they have compared with insurers.
Finally we talk about how we should address pension adequacy and the challenges of retiring with a pot rather than an income.
ABOUT THE GUEST:
Shalin Bhagwan joined the Pension Protection Fund in 2023 as our chief actuary.
Shalin brings extensive pensions, insurance and investment experience having worked across the sector for many years. He started his career in South Africa in life insurance pricing and reserving and then transitioned into liability valuations for defined benefit pension funds.
In addition, he brings significant LDI, derivative and credit portfolio management experience and has advised some of the UK’s largest pension funds on their LDI strategies both as a consultant with Mercer and portfolio manager with Legal & General Investment Management..
He is a member of the advisory panel at the Financial Reporting Council. He recently served as a member of the Institute and Faculty of Actuaries' Finance and Investment Board and as an advisory member for the task force to boost socio-economic diversity at senior levels in both the financial and professional services sectors.
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ABOUT THE HOST:
Charlotte Moore is an award-winning journalist and co-founder of Moore Squared Communications. She has spent almost two decades writing about how the UK’s largest investment organisations allocate their capital for a number of different specialist magazines including Professional Pensions, IPE and MandateWire. She started this podcast to increase understanding of how and why the UK’s £3 trillion pensions industry invests its members’ capital to provide the best possible retirement.
🔗 https://lotsmoore.co.uk/
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Chapters:
00:00 Introduction & welcome with guest Shalin Bhagwan (PPF)
05:00 The PPF levy and funding levels over time
10:00 Resilience of DB schemes and risk management strategies
15:00 PPF core competencies: investment, pension administration, reserves
20:00 Buyout vs. run-on debate and surplus flexibilities
25:00 Investment strategies, global credit markets and scheme diversification
30:00 Pension adequacy challenges and lessons from DB to DC transitions
34:00 Closing thoughts & subscribe reminder