Week ending 25 October 2019
The results of the latest ACA survey include an in-depth look at the challenges and frustrations that employers are facing in relation to GMP equalisation. 43% of employers say they are likely to opt for GMP conversion, 31% favour year-on-year calculations (so dual records) and the remainder are undecided.
The DWP has published a consultation on increases to the rates of general levy paid by occupational and personal pension schemes. Large increases will be needed if the deficit, which on a cumulative basis is currently over £16 million and estimated to grow to over £50 million by April 2020, is to be removed. The general levy funds the Pensions Regulator, the Pensions Ombudsman and the Money and Pensions Service, all of which have greatly expanded their services in recent years.
Four options for increases to the levy are under consideration, with the option preferred by the government being a 10% increase for 2020 and a wider review of the levy before April 2021. The three other options phase in substantial increases over periods of between 3 and 10 years. The consultation closes on 15 November 2019, with the first increase to take effect from April 2020.
Aviva has completed a £1.7 billion buy-in for its own staff pension scheme covering some 4,300 deferred and 1,500 current pensioner members. This is the scheme’s first buy-in, although it previously completed a £5 billion longevity swap in 2014.
In the news this week, the long-awaited tax guidance on some GMP equalisation issues is published, BAE Systems agrees to contribute £1 billion to its main DB scheme and PACE completes a second buy-in.
Over the autumn of 2019, BAC conducted an extensive survey of the actions which companies are taking to manage their defined benefit (DB) and defined contribution (DC) pension arrangements.
2019 marked 50 years since Neil Armstrong walked on the moon and this was obviously on the Queen’s mind in her Christmas message as she talked about a bumpy year but one with small steps of progress as well. In terms of pensions, it also felt like a year of small steps and occasional bumps. In this quarter’s Arena, we take a positive look back at 2019, as well as looking forward to some expected pension developments over 2020.
Despite the very different circumstances facing individual companies, bac‘s autumn 2019 survey reveals a surprisingly consistent picture of the actions which companies are finding most attractive to manage their DB and DC pension arrangements.
As DB liabilities have become legacy issues to be managed, governance has become the umbrella term for a broad range of risk management tools. In this publication, we look at the DB governance solutions we have helped our clients to implement.