, with insurers charging significant fees for taking on the risk of the pension scheme. These costs can eat into the overall value of the pension pot and reduce the amount of money available for retirees.
In summary, the idea of de-risking in pension schemes may have seemed like a prudent strategy on the surface, but the reality has proven to be far more complex and treacherous. The assumption that government bonds are safe assets has been proven wrong, as bond markets have been subject to significant volatility and losses in the past. Additionally, the shift towards liability-driven investment in defined benefit schemes may restrict returns and limit the ability to provide discretionary increases to pensioners.
Overall, the pursuit of de-risking in pension schemes has not necessarily led to the intended outcomes of protecting pensioners and ensuring financial security in retirement. It is important for pension professionals and regulators to reassess their strategies and consider alternative approaches to managing risk in pension schemes.