At the UCU Transformed meeting on 28 April, Dennis Leech (Warwick) posed the following points and questions that the Joint Expert Panel should consider.
- How does a scheme that is currently cash flow positive go into deficit?
- What do cash flow projections for income and outgo look like?
- Why use index linked gilts (currently producing a negative return)?
- Consider using the internal rate of return.
- Are investment returns really too low?
- Investigate the ‘best estimate’ valuation.
- Focus on income from investments not asset price.
- Question the facile assumption that equities universally riskier than bonds.
- Examine in detail projections of key parameters e.g. mortality, growth, inflation, etc. Also the level of prudence.
- Distinguish between risk and short-term asset price volatility.