Almost three quarters (74 per cent) of pension fund managers said the fund they work for would or was likely to increase contributions over the coming year, despite pension funds experiencing an improvement in their funded status, research from Ortec Finance has found.

The research, which surveyed senior pension fund executives in the UK, US, the Netherlands, Canada and the Nordics, revealed that 65 per cent of pension fund managers have seen their funded status improve over the past year, including 5 per cent who said it had improved dramatically.

Meanwhile, 27 per cent of pension fund managers said the funded status of the pension scheme they work for remained unchanged over the period, and 8 per cent said it had deteriorated.

Despite the improvement of assets over liabilities, the pension scheme managers questioned said there was a possibility they would increase contributions and bolster their assets for the coming year.

Indeed, just 6 per cent of plan managers surveyed said they definitely would not increase contributions, which Ortec highlighted as evidence of the the need to leave open the option for improving the relative relationship between assets and liabilities.

However, the survey also pointed out scepticism about continued funded status improvements, as 12 per cent said the pension fund they work for would definitely increase contributions this year.

In addition to this, nearly two thirds (62 per cent) said it was likely their fund would increase contributions this year, and 20 per cent said it might happen.

Ortec Finance managing director global pension risk, Marnix Engels, explained that when it came to the long-term health of a pension fund, an improved funded status in one year might not carry over to the long-run health of the fund.

“Keeping the door open to increased contributions to sustain the relative value of assets over liabilities is reasonable,” he added.

“There are issues to consider in order to maintain this improvement in their funded status, particularly during periods of volatility, which is why it’s important to keep clear and detailed oversight of both the assets and liabilities of a fund.”

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