There was some research done earlier this year by the Association of British Insurers (ABI) which examined the likelihood of defined benefit pension schemes going bust. Based on a hypothetical defined benefit scheme that matches the typical real life scheme they concluded that an increase in longevity of five years could make it almost twice as likely to fold – although that’s only a movement from 3% to about 6%. Defined benefit schemes are going out of fashion pretty quickly anyway – in 2000 there were 18,350 private sector defined benefit schemes but in 2006 there were just 3,470. Over the same period the number of people in these schemes went from 4.1m to 1.6m.

There’s a PDF available to download on the ABI site if you want the full report titled Coping with uncertainty and the importance of the sponsor’s covenant.

The Association of British Insurers (ABI) has announced an initiative designed to reduce the time taken to make Open Market Option (OMO) payments to pensioners.  The scheme includes creating an electronic information exchange which will, apparently anyway, reduce the time taken to switch annuity providers.  

Are they implying that delays of months are currently caused by a lack of efficient technology?  I suspect they’re actually caused by a lack of motivation to solve the problem.  In fact, 30 days still seems like quite a long time doesn’t it?  Just shows you how low the bar was set initially.

I suppose we’ll have to wait and see what effect this initiative has once we’ve given it time to work.