At the same time, 41% of trustees view inflation as only a minor concern and 53% of trustees have taken no steps to reduce longevity, inflation and investment risk exposure.
With increased pressure on sponsors to reduce deficits, the survey demonstrated that UK trustees are concerned about the impact of market volatility on funding positions, yet are extremely under-hedged against the major risks: longevity, investment and inflation. For a typical pension scheme, which isn’t hedged for inflation, a 1% rise in long-term inflation expectations could see liabilities increase by around 20% noted the research report.