The Government Actuary's Department (GAD) has supported a government exercise to estimate the impact of new pension measures on member outcomes.
The Chancellor announced a wide range of pension reforms designed to improve member outcomes and support the UK economy in his Mansion House speech on 10 July.
GAD's analysis
A report published by the Department for Work and Pensions (DWP) following the announcement combines analysis by DWP and modelling by GAD.
GAD undertook the modelling to assess the impact of increased investment in productive assets on investment returns. Our analysis focused on private equity asset classes.
Using stochastic modelling techniques, GAD illustrated a range of projected defined contribution (DC) pension fund values under different investment scenarios.
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Results
Our analysis assessed the impact of a 5% allocation in a DC fund towards private equity, in 2 example asset allocations.
The outputs of modelling for both allocations found that the final pension pots were larger than the status quo, reflecting the slightly higher returns Private Equity are expected to bring.
GAD actuary Keith Gourlay was part of the project team. He said: "GAD provided actuarial expertise and insight to inform the government of possible options, assumptions and outcomes related to DC pension investment approaches."
