Week ending 15 November 2019
As part of their ongoing work to highlight the dangers of pension scams, The Pensions Regulator and Financial Conduct Authority have released the findings of recent research showing that it could take a victim 22 years to build a pension pot of £82,000, which is the average amount lost to scammers. More education does not seem to provide more protection, as people with a degree are 40% more likely to accept a free pension review from a company they don’t know, which is a common scamming tactic. The research shows that the regulators’ ScamSmart campaign is not having enough of an effect, with nearly two-thirds of people still willing to trust someone offering pension advice out of the blue, another common scamming tactic.
Pension Insurance Corporation (PIC) has converted an existing longevity swap into a £750 million buy-in for the Scottish Hydro-Electric Pension Scheme. The trustee of the scheme had previously hedged all longevity risk in their pensioner population through a combination of a £250 million buy-in with PIC and the longevity swap with Legal & General. The longevity reinsurance behind the swap remains in force and has transferred over to PIC.
The Consumer Prices Index dropped to 1.5% in the year to October 2019, which is the lowest level since November 2016. CPIH, which the Office for National Statistics prefers, was also 1.5% in October, whilst RPI was 2.1%.
In the news this week, there are two DB scheme closures, changes to the Coronavirus Job Retention Scheme and the FCA publishes new rules on pension transfers whilst the CMA reminds trustees about their compliance statements
Given the very company/scheme-specific impact of the Covid-19 pandemic, in this quarter’s Arena we simply show all the usual financial and investment analysis for what was a very turbulent first three months of 2020, plus a summary of key pension developments and Company pensions news over the quarter.
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.
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