If you follow the Jellyblog – or ‘The Jog’ as it’s starting to be referred to by some of our readers – you’ll know that we are interested in the changing demographics of our population and the related trends that it both affects and creates. Well here’s an interesting report that links longevity and brands, although not in perhaps the manner you’d immediately expect.
Pensions are a hot topic at the moment, as exemplified by the coverage given to the pension pot of Sir Fred Goodwin or BBC senior executives. Ever since Labour came to power in 1997 – and promptly removed the tax credit on dividends from pension schemes – the legislative and regulatory burden on pension schemes has been increasingly, at times seemingly exponentially. Couple that with the fall in stock markets and recessionary strain upon companies’ ability to plough spare cash into pension schemes and you have a pension’s structure that is nearing collapse. And this is before you factor in people living longer and wanting to retire sooner. For a clear and concise strategic overview, read this rather good Deloitte report entitled ‘The End Game’.
Not that this is anything new; pensions have been high on the agenda for a while now – championed by experts such as Dr Ros Altmann – although no political party seems able to grapple with the situation to the point of having a cogent and affordable solution.
What is new is something we read in apress release yesterday, again from Deloitte which suggests that the deficit of FTSE-100 company pension schemes is now more than £300 billion and that cash contributions alone could take over 50 years to plug. However, with the trend increases in longevity, by that time life expectancy will have advanced even further and so the financial goalposts will have moved even farther. In recognition of this, the release says “To compensate, they are now seeking to shift capital and assets from their balance sheet to their pension fund. This can include real estate assets, the value of brands or other investments. Deloitte expects this trend to increase significantly over the next few years.” Using your brand as an asset to increase the value of your pension scheme? Now that’s interesting.
Brand equity is the goal of all brands, in simple terms because it supports the brand owner’s objectives, the primary of which is usually to sell more product or service. Therefore, the traditional intangible values of a brand, for example ‘quality’ or ‘reliability’ may now be expanded to include a more traditional defined financial value that, in turn, may become an asset of the pension scheme. This may start to shift the time frame for brand equity from short-term, contributing to an ad campaign or product life cycle to long-term, contributing to the longevity of a pension scheme and its members.
We think that the issue of building brand equity is going to become even more important over the coming months and years.