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Price inflation presents key long-term risks for defined benefit pension schemes

Elevated Price Inflation

By Brian Mulcair | April 6, 2022

The recent spike in price inflation presents several key risks for pension schemes and is a prompt for trustees and sponsors to consider the implications of high inflation for their pension schemes.
Pensions Corporate Consulting|Pensions Risk Solutions|Retirement
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Compared with recent history, price inflation has been elevated reaching levels not see for over 10 years. Price inflation presents key long-term risks for defined benefit pension schemes as it directly affects benefits payable. The risks manifest themselves but may be managed through different combinations. Significant changes in relatised or expected (future) inflation, compared with prior expectations, can therefore mean that it is appropriate or necessary to review some of the relevant key risk management approaches.

The WTW Ireland Pension Risk Management Briefing Note, available as download at the bottom of this page, highlights potential considerations for pension schemes, including the process for awarding discretionary pension increases, the impact on the funding / accounting position and investment considerations (such as hedging and asset de-risking triggers).

If you would like further information or to discuss any of the issues raised in this note, please contact your usual WTW consultant or reach us directly here.

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Head of Corporate Consulting

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