PwC slams pension valuations
Actuarial experts at PricewaterhouseCoopers have found that more than half of UKFDs are not getting a transparent valuation of their pension schemes.
The latest PwC actuarial assumptions survey shows that 55% of FD pension schemescontinue to be based on discount future dividends rather than market value.
Almost one in three actuaries also have no plans to switch valuation system, thereport claims, despite evidence that discounting future dividends is ‘a poormodel of what happens in real life.’
Brian Peters, a PwC director, said: ‘The actuarial valuation based ondiscounting future dividends is not giving finance directors the kind of usefuland realistic indicator that market valuation would bring.’
Over the last three years, market value as a basis for valuation has risendramatically from 1% to 45%.
Peters added that actuarial valuations used properly quantify risk for schemesand can improve the quality of management decisions and investment strategy.He said: ‘The message to trustees and business must be to make sure you gettransparency of financial information from your actuary – in short make thevaluation process work for you.’