Week ending 18 October 2019
Asda has fully secured its defined benefit liabilities via a £3.8bn buy-in (soon to be a buy-out) with Rothesay Life. This required a special company contribution of around £0.8bn to be paid to the Asda Group Pension Scheme. BAC has been Asda and Walmart’s lead actuarial adviser throughout this process. One of the most striking features of the deal is the very immature nature of the Scheme’s liabilities, which are predominately deferred pensions. This demonstrates quite how much the bulk annuity market has changed….
September 2019’s CPI was 1.7%, meaning that for 2020 statutory revaluation of deferred pensions, statutory indexation of post-5 April 1997 pensions and the increase in post-April 1988 GMPs will all be 1.7%. Likewise, the lifetime allowance is expected to increase from £1,055,000 to £1,073,000 from 6 April 2020. Due to its “triple-lock”, the Basic State Pension is set to increase next April in line with earnings growth, which seems likely to be around 4%.
The Pension Schemes Bill was included in the Queen’s Speech and, as expected, includes new TPR powers, regulation of CDC schemes, the pensions dashboard but nothing on the regulation of DB consolidators (which is apparently in the “too difficult” box). The Pensions Minister is confident that the Bill has cross-party support (it has already had its first reading in the House of Lords), but there is a large question mark over whether this Parliament will last long enough to enact it.