Despite market volatility and significant disparities between markets, a senior investment consultant for one of the UK’s leading actuarial and pension consulting firms has stressed that with the continuing effective vaccination rollout, we can confidently expect GDP to bounce back and will see a strong robust economic recovery.
Paul Francis, Principal Investment Consultant at Quantum Advisory, was speaking at Quantum’s latest ‘Pensions for Brunch’ webinar which features key insights into selected topical issues affecting the pension and investment industry.
Paul opened the event by outlining the investment market forecast for 2021 and themes for pension fund investment. Highlighting the International Monetary Fund’s (IMF) confident predictions of a 5.5% GDP growth over the coming year, Paul said: “2020 was obviously difficult in many ways, but there were some positive returns over that period.
“Our rapid vaccination rollout is giving confidence to markets, with the vaccine allowing industry to return to work. Political issues such as the US administration and Brexit near enough a done deal, means there is less short-term uncertainty. However, the long-term outlook is still far from certain with significant government debt levels to be addressed, the challenge of decarbonising energy and trade deals still to be done.
“Central banks have pumped a lot of money into the economy and when the output gap closes there is a low risk this may lead to inflation longer term – although this won’t be for some years to come.”
Andrew Riley, Director of Resilient ESG Governance Services, gave an overview of practical tools for pension trustees to assess what their pension scheme is doing and what steps can be taken to integrate ESG considerations.
Senior Consultant and Actuary at Quantum Advisory, Simon Hubbard, ended the session by providing a roundup of key pension issues including the imminent change to reform the UK’s Retail Prices Index which should result in a fairer system, the decreasing number of people in a defined benefit pension arrangement – which in 2020 fell below 10 million for the first time, and the effect of COVID-19 on mortality rates. Simon said: “Life expectancies are difficult to predict from this past year and the industry has not fully worked out the implications of this just yet. It might be that we disregard these abnormal years and assume largely stagnant life expectancy for a short period.”
The ‘Pensions for Brunch’ webinar was the latest in Quantum’s pension and investment focused seminars. The latest webinar is available to watch here.