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  #581  
Old 10-13-2017, 05:17 PM
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Mary Pat Campbell
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ST JOSEPH HEALTH SERVICES

http://www.golocalprov.com/news/five...-fund-collapse
Quote:
Five Major Developments in St. Joseph Pension Fund Collapse

Spoiler:
This has been a critical week in the effort to unveil the underlying issues in the St. Joseph Health Services' pension fund collapse. First, GoLocalProv.com uncovered a key document relating to the decisions by the board of CharterCARE prior to the acquisition by Prospect of California.
SLIDES: READ THE 5 MAJOR DEVELOPMENTS BELOW

Then, Wednesday's hearing by receiver Stephen Del Sesto before Judge Brian Stern addressed a number of critical points and set the stage for the next steps. Third, the retirees and UNAP union got active and took their message to Bishop Thomas Tobin and the Diocese of Providence.

1. Retirees Get Active

Scores of frustrated participants in the St. Joseph Health Services of Rhode Island pension plan gathered and picketed outside Providence Superior Court on Wednesday and then protested outside the Offices of the Roman Catholic Diocese of Providence.

"Bishop Tobin's silence on this issue speaks volumes about the lengths to which he and Church leaders will go to avoid accepting moral and legal responsibility for the thousands of lives that could be devastated by an unexpected and dramatic reduction in pension benefits," said Lynn Blais, RN, president of UNAP Local 5110 at Our Lady of Fatima Hospital.

"Church leaders were warned that the pension fund was in trouble and yet they said nothing. That silence now has the potential to hurt people -- many of whom remain active members in Catholic parishes. The Church's silence has real consequences, and we intend to keep fighting to hold Bishop Tobin and his subordinates accountable."

2. No Role for AG in Receivership

Judge Brian Stern ended Wednesday’s hearing with a clear message to the Attorney General’s Office — they will not play a role in the receivership.

Kilmartin, who had a regulatory responsibility under the Hospital Conversion Act, claimed that he represented the interests of the parties and the assets, but just three years and three months after the sale of St. Joseph to Prospect of California, the pension plan which had been orphaned with Kilmartin’s approval was placed in receivership.

Stern told the court that Kilmartin’s office and any other agency could investigate independently as they see fit.

Kilmartin continues to refuse to answer questions or sit down for an interview.

“The receivership is on-going, and as was stated before, our office is in contact with the receiver and monitoring the ongoing process to see where the Office has legal standing to intervene. As is standard policy, given these set of facts, we have no further comment at this time,” said Kilmartin spokesperson Amy Kemp on August 30 in an email to GoLocal. Kempe has refused three subsequent requests for interviews.

3. Diocese, Roger Williams Medical Center, and Charter Care All Failed to Make Payments

As GoLocal unveiled on Tuesday, the St. Joseph pension fund was in a dire financial situation going back as early as 2007, according to actuarial documents secured by GoLocal. And, the distress probably started much earlier.

Moreover, each of the three organizations that controlled the hospital over the decade ignored directives from the actuarial as to the amount needed for contributions to properly fund the pension fund.

In 2014, during the sale of St. Joseph/CharterCARE, the actuarial identified that the contribution needed to "reach 100% funding level projected to the end of the plan year” was $29,573,536, but CharterCARE's contribution was just $14 million.

“But, clearly a hospital like St. Joseph that was dealing with financial distress - you clearly know that if not funded properly, the retirees would be impacted adversely,” said Stephen Del Sesto, the receiver for the pension fund.

4. Wistow Gives a Discount, Violet Goes Pro Bono

The lawyers joining the effort to recoup funds for the St. Joseph pension fund are among Rhode Island's most talented and accomplished.

Max Wistow of 38 Studios and Station Fire fame has joined the effort of receiver Stephen Del Sesto.

For the investigative phase, Wistow and his firm will receive the same hourly rate as receiver Del Sesto of $375 per hour.

Wistow’s firm will receive 10 percent of any funds recovered prior to litigation and his firm will receive 23 1/3 percent of all funds recovered via litigation.

The blended rate is substantially lower than his traditional rate of 33 to 40 percent, and is likely to be lower than the 16 percent he received in recovering over $60 million in the 38 Studios case — Wistow received approximately $11 million.

Former RI Attorney General Arlene Violet has taken on the cause of representing more than 300 of the oldest retirees. Violet is working pro bono.

5. Subpoenas Are Coming

Judge Brian Stern outlined some procedural issues at Wednesday's hearing -- those will be finalized on Monday.

That will clear the way for Max Wistow and his firm to begin dropping subpoenas in this case.

Wistow has not disclosed who will receive subpoenas.



https://www.usnews.com/news/best-sta...e-pension-cuts
Quote:
Retired Hospital Workers Protest Possible Pension Cuts
Retired hospital workers in Rhode Island are protesting an effort to cut their pensions by as much as 40 percent and criticizing the response of the Roman Catholic diocese that established their failed pension plan.
Spoiler:
PROVIDENCE, R.I. (AP) — Retired hospital workers in Rhode Island are protesting an effort to cut their pensions by as much as 40 percent and criticizing the response of the Roman Catholic diocese that established their failed pension plan.

The Providence Journal reports that about 100 people marched Wednesday in Providence to decry the potential cuts to pensions for former workers of St. Joseph's and Our Lady of Fatima hospitals. Some carried signs with images of Bishop Thomas Tobin and messages such as"Where's our moral leader?"

The diocese says its financial responsibility to the fund ended before the current problems.

Pension managers say the fund does not have enough money to pay promised benefits. The plan was found to be insolvent in August.
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  #582  
Old 10-17-2017, 11:30 AM
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Mary Pat Campbell
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PBGC
MORTALITY TABLE

http://www.pionline.com/article/2017...16#cci_r=73393

Quote:
New mortality tables mean more for PBGC
Spoiler:
New mortality tables from the Internal Revenue Service will keep plan sponsors busy adjusting calculations and putting more money into their defined benefit plans, but the bigger impact could be higher premiums owed to the Pension Benefit Guaranty Corp.

As people live longer, the updated, more conservative mortality tables released Oct. 4 mean that funding liabilities used to determine contributions to pension funds will go up by as much as 5%.

That in turn means that variable-rate premiums that sponsors pay to the PBGC for underfunded plans could also spike. Sponsors offering — or considering an offer of — lump-sum distributions to plan participants also will see those costs increase, beginning with the 2018 plan year when the tables take effect, and sponsors' ability to offer lump sums could be derailed.

While the tables will affect funding calculations, "that's just a sideline for what's going to happen with PBGC premiums," said Robert Collie, chief research strategist, Americas institutional with Russell Investments in Seattle. "That's going to be much more directly painful. It is more equivalent to another change to PBGC premiums, and that's just real money (sponsors) are not going to get back."

Many plan sponsors are making higher pension contributions to boost their funding ratio to avoid those variable premiums — and even borrowing the cash to do so, said Justin Owens, Seattle-based director of client strategy and research at Russell Investments, in ​ the same interview. "We expect a meaningful uptick in contributions to avoid PBGC premiums, and this is just one more reason why they should do it sooner or later."

Under the new mortality tables, funding-target liabilities that affect funding ratios used to determine contributions and to set benefit restrictions, including when lump sums can be offered, are expected to increase as much as 4% or 5%, and liabilities used to calculate PBGC variable rate premiums will be higher.

The Society of Actuaries estimated that in 2018, minimum required contributions will increase 11% and liabilities for estimated aggregate funding targets could increase 2.9%, or $65 billion. Variable PBGC premiums based on plan funding levels could increase 12% to $9.6 billion, the SOA projects. For lump sums, the new IRS tables, which combine male and female tables, are expected to increase costs up to 5%.

Plan sponsors were not surprised that the IRS refreshed mortality tables, which were last updated for 2008. The Pension Protection Act of 2006 requires updates every 10 years, and companies have been using newer mortality tables issued in 2014 by the Society of Actuaries for their financial reporting since then, to show investors their pension expenses on corporate balance sheets. Waiting for the IRS to update the tables used for funding calculations with the SOA information was the missing piece.

What caught plan sponsors off guard was how late in the year it happened. The IRS proposed the updates in December 2016, but as 2017 entered the fourth quarter, plan sponsors and their advocates in Washington urged the IRS to hold off on issuing them until 2019 to allow enough time to adjust.

"The bigger deal is the timing," said Alan Glickstein, Dallas-based senior retirement consultant at Willis Towers Watson PLC. "For many plan sponsors, it's a very legitimate concern."

At an IRS hearing on the proposal, Bruce Cadenhead, Mercer LLC partner and chief actuary, testified on behalf of the ERISA Industry Committee that plan sponsors needed at least 18 months.

One small victory was that the IRS will allow a potential one-year delay if plan sponsors can prove an administrative hardship or a potentially significant business impact.

"That appears to be a very generous opt-out for funding (calculations) for 2018," said Mr. Cadenhead in an interview. With what appears to be a relatively simple self-certification process, "I expect a lot of sponsors to take advantage of it," he said.

Plans that do not elect a one-year delay will have to pay PBGC premiums that are due 9.5 months into the plan year, and file 5500 reports one year later.



Ability to customize

Plan sponsors also appreciate that the IRS made it easier for them to use their own mortality tables in cases where a company's demographics might show different mortality experiences. Where that once was an option for only a few of the largest companies, hundreds of plan sponsors may be able to take advantage of that now, experts say.

But timing is still an issue for those wanting to do so starting in 2018 because of a February deadline for approval, and unless IRS officials can approve those quickly, plan sponsors may have to play it safe by using the standard tables.

"We have seen some interest from sponsors," said Mr. Owens with Russell, but it "is a long process to generate your own tables. It will take some time to see those start to get implemented."

A race for the door?

Since the one-year delay option only applies for calculating funding demands and not lump-sum values, consultants are expecting to see more lump-sum activity in the final months of 2017, before costs rise.

Deciding whether to offer lump sums to participants could also get more complicated with the new tables. As under the existing tables, if a plan falls below 80% funded, its ability to offer lump sums will be partially restricted, and if it falls below 60%, it is fully restricted.

The expectation of new tables were a large driver in lump-sum offers in 2017, said Mr. Glickstein of Towers Watson, who anticipates less activity in 2018.

Russell's Mr. Owens does not expect lump-sum offers to stop in 2018, "even if they cost 3% or 4% more," he said.

"We would view this as one more reason why plans need to focus on funding up their plans and derisking their plans," said Mr. Collie.

Mr. Cadenhead of Mercer notes that "if interest rates go up, that works in the opposite direction.

"On the other hand, plan sponsors are very conscious of managing risk. One way to reduce that is by reducing the size. I think sponsors are going to keep looking at that on the other hand a lot," said Mr. Cadenhead.

While sponsors and their consultants resign themselves to the new reality, they take some comfort that future updates won't be so dramatic. With future improvements for the first time built into the tables, "instead of waiting 10 years, they now will be making smaller change every year," said Mr. Collie of Russell.

Society of Actuaries officials, sensitive to the controversy that arose when its 2014 mortality tables were released after a 14-year gap, are collecting data from sponsors to release the next updates on a more frequent basis, and the next version is expected in a matter of weeks.

With mortality improvements slowing down instead of the rapid increases in the previous decade, Mr. Cadenhead thinks that could reduce funding liability increases by as much as 1% in subsequent years.
http://www.benefitspro.com/2017/10/1...rn=1508244752#!

Quote:
PBGC premiums, pension costs to go up next year
After two-year delay, IRS implements new mortality tables
Spoiler:
Updated mortality tables released by the IRS last week will make the cost of employers’ defined benefit plans more expensive.

That news will not come as a shock to plan sponsors and actuaries.


The IRS delayed implementing the new mortality numbers, which impact how plans calculate funding status, annual required contributions to pension plans, and the premiums they pay the Pension Benefit Guaranty Corp., in 2015.

The numbers reflect the fact that Americans are living longer. The mortality tables, produced by the Society of Actuaries, show the average 65 year-old male can expect to live to 86.6 years of age; the average 65 year-old female can expect to live to 88.2 years of age.

The IRS last implemented new mortality numbers in 2000. The Pension Protection Act of 2006 requires the tables to be revised every 10 years.

The upshot of the new numbers is that pension plan liabilities will increase, in turn reducing individual plans’ funded status, according to SOA.

And that means many plans’ required minimum contributions will go up, along with premiums paid to PBGC.

Last April, the SOA estimated aggregate required contributions for all plans will increase 11 percent in 2018, from $7.1 billion to $7.9 billion.

Many plan sponsors have been contributing more than the required minimum in recent years, the SOA noted.

Premium payments to PBGC are expected to increase 12 percent next year, from $8.6 billion to $9.6 billion.

Josh Barbash, an asset allocation strategist at Russell Investments, said the impact of the new mortality numbers will vary from plan to plan.

“It is difficult to generalize about the near–term impact on contributions since many plan sponsors are fairly well–funded and the impact is amortized over seven years,” Barbash wrote in a blog post.

“Further, some plan sponsors have been contributing more than the minimum required amounts in recent years, so an increase in the required minimum will not necessarily change the actual amount contributed,” he added.



Lump sum payment costs going up too


In recent years, employers that sponsor defined benefit plans have increasingly offered current and retired workers lump sum pension buyouts to mitigate pension costs and volatility in funding requirements.

The new mortality tables will also be applied to calculating the lump-sum payments, and will make them more expensive for sponsors.

Barbash said the buyout activity seen in the past two years will slow in 2018 as a result of the new tables.

“This is likely to reduce the popularity of offering lump sums to terminated participants, since they will become more expensive for plans,” he wrote.

Barbash said the fourth quarter of this year may bring more lump-sum offers from employers, as they take advantage of current longevity estimations before the new mortality tables are implemented in 2018.
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  #583  
Old 10-18-2017, 08:52 PM
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Mary Pat Campbell
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Quote:
Originally Posted by campbell View Post
https://www.ai-cio.com/news/capita-s...nsion-changes/

Quote:
Capita Staff Plans Nine-day Strike over Pension Changes
Company “surprised and disappointed” with union’s rejection.

Spoiler:
After failed discussions with Capita over changes to its defined benefit pension plan, staff represented by British trade union Unite have decided to strike for nine days at the end of the month.

According to Reuters, Capita said it put forward a “material improvement” to what it had offered workers still included in the defined benefit scheme, which was rejected by the trade union. Plan members voted to strike last month, despite cancelling an earlier strike during last-minute discussions with the company.

Capita was reportedly “surprised and disappointed” with the union’s rejection of the offer without consulting its members, saying that the action will result in the company reverting to its previous offer to the plan, as it is unable to continue working with the improved offer.

In June, the company informed staff it planned to close its defined benefit plan and transfer staff into a defined contribution plan, prompting the union to claim that the offer would result in a “massive cut” in retirement money for its 2,920 members, roughly 4% of Capita’s 73,000 workers.

“Capita’s pension proposals will have far-reaching consequences for the retirement of many Unite members,” Dominic Hook, Unite national officer, said in a statement. “Some staff will lose a shocking 70% of their retirement income.”

This is just weeks after UK parcel delivery company Royal Mail saw its workers vote in favor of a strike for similar reasons.

The strike is scheduled to take place from October 28 to November 5.
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Old 10-18-2017, 08:59 PM
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http://www.marketwatch.com/story/why...ans-2017-10-11

Quote:
Why is corporate America issuing debt to fill the holes in pension plans?

The Pension Benefit Guaranty Corporation has slowly raised the insurance fee on unfunded pensions to around 3.4%

Spoiler:
During a conference call, International Paper’s IP, -0.21% CFO highlighted one way corporate America has tried to solve its gaping unfunded pensions gap – issuing debt.

Borrowing money to pay into company pension plans can come off as another one of Wall Street’s attempts at financial jiggery-pokery, but analysts say the economics of such moves are sound. Highly rated corporate issuers are for the first time in a place where the price of issuing debt is below the cost of having unfunded pension liabilities on the books.

That’s because the Pension Benefit Guaranty Corporation, an independent government agency tasked with bailing out failed company pension funds, has slowly raised the insurance fee on unfunded pensions to around 3.4% in 2016, according to Bank of America Merrill Lynch. In the backdrop of strong appetite for corporate debt, yields for investment-grade corporate paper fell below the insurance fee (see chart below).

.....
The average yield in the BofA Merrill Lynch Corporate Master Index, the benchmark for the universe of investment-grade bonds, fell to 3.16% from 3.52% in December.

“Companies can issue to reduce the pension deficit at little to no incremental cost,” wrote Hans Mikkelsen, credit strategist at BAML. “The economics of carrying large underfunded pension liabilities is deteriorating over time.”

Others have followed International Paper’s example. Large blue-chip firms that have a large pension shortfall relative to their firm’s value include Delta Airlines DAL, +0.19% , General Motors GM, +0.22% and Xerox XRX, +0.27% . Sure enough, General Motors issued $2 billion in February for that very purpose, with Delta selling the same amount in March.


–– ADVERTISEMENT ––


Some investors are applauding the moves if only because U.S. firms have resisted setting aside money for pensions, often choosing to use their leftover profits for stock buybacks. Thomas Atteberry, a bond fund manager at FPA, said borrowing money to contribute to pension plans show a strange prudence as the problem of unfunded pension gaps are not going away anytime soon.

In a report by S&P Dow Jones Indices published in August, the corporate pension funding gap for companies listed in the S&P 500 SPX, +0.07% was $390 billion in 2016, or 80.7%.

Those in charge of the firm’s finances often overlook these large deficits as a constant stream of retirees can seem an ever-present problem. Corporate treasurers might, then, fall into temptation and deal with the issue later.

A recent survey by BAML highlights their skewed priorities. The polled companies said the most important priority for repatriated earnings would be paying down debt, followed by stock repurchases. In that same survey, contributing to pensions lurked in last place.

But others are less impressed. Marc Bushallow, managing director of fixed income at Manning & Napier, said his investment firm views pension obligations as another form of debt. As such, moves like those made by International Paper only shifted the composition of its debt, without making a “material difference” to its finances.

Even so, more companies might join the bandwagon if a tax overhaul makes strides in Washington. Companies can deduct pension contributions from taxes. But if corporate taxes fall as President Donald Trump promised, the window of opportunity from accruing that tax benefit may vanish, creating “strong incentives for dealing with the pension issue between now and year-end,” said Mikkelsen.

And the benefits can prove substantial. International Paper’s IP, -0.21% decision to issue $1.25 billion of debt to pay down its pension obligations helped the paper manufacturer reap $400 million in tax savings.

For those tempted to wait out the problem, the Federal Reserve’s push to raise rates could alleviate the weight of unfunded pensions.

Prior to 2008, corporate America was awash in money, its pension funds filled to the coffers. After the implosion of the economy and the subsequent shift to ultra-low interest rates, the value of corporate pension liabilities ballooned, widening their funding gap.

Yet if inflation sticks on its slow and steady pace, a rapid tightening of monetary policy is unlikely to come forth

the beauty is the correction at the bottom:

Quote:
Editor’s note: The article has been changed to reflect that International Paper had issued $1.25 billion of debt not $1.25 trillion.

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  #585  
Old 10-19-2017, 08:13 PM
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Mary Pat Campbell
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UNITED KINGDOM

http://www.pensions-expert.com/Comme...ns-gap?ct=true

Quote:
We need to narrow the pensions gap
Spoiler:
A shameful difference in pension entitlements between men and women was highlighted in our recent survey on fairness in pensions.

The survey also showed inequality between generations. The final category in the unholy trinity of unfair pensions was a divide between defined benefit pensions in the public sector and far less generous defined contribution pensions in the private sector.

I freely confess that I had not realised quite how big the gender gap remains in UK pensions until I researched the figures. The actuary in me had always taken refuge in the facts that women historically had lower retirement ages, lived longer and received the same pension accrual as a man on the same wage for each year of service.

I did not worry too much about the lower pay of women, maternity breaks – and increasingly other care that falls predominantly and unfairly on women – the relative prevalence of part-time work due to family responsibilities, or the lack of any occupational pension provision at all in some female-dominated industries.

DC removes women's only advantage

The continuing move to DC provision removes one of the few inherent benefits of the current system for women, with their extra longevity now being funded directly from their own pots. I also suspect that the inadequacy of minimum contributions puts more onus on voluntary saving, which is naturally harder for those on lower incomes.

Hopefully this may be partly offset by the female tendency to save more than men with a similar disposable income. Equally, I am optimistic that the auto-enrolment review will start to address the limited access to pensions for part-time workers and the segment of the self-employed universe filled by workers seeking flexibility (even if on lower pay).

The average pension for a woman (£14,300 per year) is much lower than for men (£20,700 per year) research by Prudential shows. Only 40 per cent of women expect an adequate retirement income, and more than 20 per cent retire with no private pension at all.

The good news is that these gaps are narrowing, with pensions for women retiring in 2016 only 27 per cent lower than for men, compared with a massive 46 per cent difference in 2008. We are going the right way, but let us not delude ourselves that we are already in the right place.

As for the inequity between young and old and public and private sector workers, we still see voters drawn to the idea of the unsustainable triple lock and keeping state pension age down despite increasing longevity and costs, as well as supporting pay rises for public sector workers.

Perhaps this is genuine altruism from people who do not expect to ever benefit personally or, rather, it is a slightly naive hope for a better future for everyone equally.

Hugh Nolan is president of the Society of Pension Professionals


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Old 10-19-2017, 08:18 PM
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UNITED KINGDOM

https://www.bloomberg.com/news/artic...o-solve-itself

Quote:
The U.K.'s $86 Billion Pension Problem Is About to Solve Itself

BOE rates, life expectancy data seen curbing pension deficits
Firms with big liabilities have underperformed since Brexit



Spoiler:
For U.K. Plc, the sting of Brexit comes with an unexpected bonus.

With no effort on their part, British businesses may see pension deficits that have burdened them for years be practically wiped out if the Bank of England raises interest rates as predicted and they budget for slowing gains in life expectancy, according to estimates of New York-based consultancy Mercer.

That will give executives one less thing to worry about as they prepare contingency plans in case Britain can’t strike a deal on splitting with the European Union. Companies like BT Group Plc and Marks & Spencer Group Plc, whose liabilities are almost double their market value, will also remove a stigma that has contributed to years of under-performance in their shares.

“If you bought a basket of these stocks you would probably make money from here,” said Andrew Millington, the acting head of U.K. equities at Aberdeen Standard Investments, which owns shares in firms with big pension liabilities like Tui AG, BAE Systems Plc and AA Plc that he expects will benefit.

The idea that corporate Britain could fill holes in staff retirement budgets without slashing dividends would have been unthinkable even a year ago. The shortfalls of FTSE 350 companies had soared to a record 165 billion pounds ($217 billion) as the BOE cut rates to spur the economy after the Brexit vote, throttling pension income that relies on higher bond yields.

But companies have been “climbing out of a pit” since then, according to Glyn Bradley, principal of U.K. wealth at Mercer. The gap dropped to an 18-month low of 65 billion pounds in September, partly because pension fund managers made more on their equity investments as the FTSE 100 rallied 8 percent in the past year.


Not all investors have noticed the U-turn. The 14 firms with the biggest liabilities relative to market value have trailed the FTSE 350 by 10 percentage points since Brexit, according to data compiled by Bloomberg and RBC Capital Markets.

The game changer will be if BOE Governor Mark Carney raises interest rates to contain inflation triggered by the pound’s post-Brexit decline. Traders see him hiking rates by 50 basis points in the next 12 months, possibly starting as early as the BOE’s Nov. 2 meeting. If the long-term yield on corporate bonds moves by the same amount, that could potentially bring the pension deficit down to about 12 billion pounds, according to Mercer estimates based on current conditions.

Earlier Death

What’s left of the shortfall, meanwhile, could be eliminated if listed companies used the latest longevity forecasts from Continuous Mortality Investigation Ltd. in their retirement budgets. Last year, CMI cut projected lifespans for people aged 65 versus the 2013 figures many companies still plug into their models.

“We may well start to see the aggregated deficits across the defined-benefit universe disappearing, perhaps even moving to a small surplus over the next year or so,” Bradley said from Manchester.

Adopting the newer longevity statistics helped Tesco Plc more than halve its deficit between February and August. If BT were to switch, it could knock 1.3 billion pounds from its almost 10 billion-pound deficit, according to Gordon Aitken, a London-based analyst and actuary at RBC. He says BT and Marks & Spencer will benefit most from the revision in longevity.

“Money that gets paid to pension schemes is cash, so it’s money that could go to dividends," Aitken said.

A BT spokesman declined to speculate on potential changes to the company’s pension scheme, citing an ongoing triennial review by trustees. A spokeswoman for Marks & Spencer didn’t respond to messages.

Final Salaries

Given how pervasive pension shortfalls have been this decade, some investors may wait for confirmation that deficits can narrow further before jumping in.

A lot could go wrong, after all. Stalled Brexit talks might put pressure on an economy facing the slowest growth since 2012, which would hinder the BOE’s ability to raise interest rates. If inflation keeps accelerating from five-year highs, that would eat into the pension income. And many factors beyond interest rates move bond prices.

But any evidence that pension deficits are sliding could also ease political pressure on business executives to stop prioritizing shareholders over pensioners -- a practice that’s come under greater scrutiny since retailer BHS Group Ltd., and more recently Monarch Airlines Ltd., collapsed and left their pensioners uncertain about the integrity of their policies.

Defined-benefit schemes, which typically guarantee retiring Brits a percentage of their final salary, became untenable for some firms during the era of ultra-low interest rates that followed the global financial crisis. While most companies scrapped them in favor of less-onerous defined-contribution pensions, millions of legacy policies continue to weigh on corporate balance sheets.

While Millington of Aberdeen Standard Investments has been buying shares of life insurers like Aviva Plc and Just Group Plc that win from slowing improvements in mortality, he said the most pension-ridden companies would naturally be slower to lure money managers.

“Investors are just starting to see this trend in U.K. longevity, but many aren’t yet willing to believe it will continue,” he said.


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