Week ending 14 February 2020
The Pensions Regulator has published its response to the consultation on the future of trusteeship and governance.
The single code consolidating all 15 current codes of practice is expected to be published for consultation in the first half of 2020. This will form the basis of a subsequent review and updating of the content of the Trustee Knowledge and Understanding (TKU) code (consultation expected in the early part of 2021). There will be no requirement for specific qualifications or CPD to evidence TKU, but an indicative baseline of time spent on ongoing learning is set at 15 hours for lay trustees and 25 hours for professional trustees. The trustee toolkit will be reviewed for improvements over 2020 and 2021. Once the new standards are in place and have had time to bed in, TPR will run an initiative to test levels of TKU and consider taking action where improvements are needed.
The Regulator is not taking forward the idea of requiring a professional trustee on every trustee board. It will chair an industry working group on improving the diversity of trustees. TPR plans to commission research on sole trusteeship but is not making any changes to how it regulates schemes with a sole trustee at present. TPR is still monitoring DC consolidation activity and working with the DWP and the industry on how to overcome the barriers involved, especially in winding up schemes with guarantees.
Chancellor Sajid Javid resigned in the Cabinet reshuffle and is replaced by Rishi Sunak, who was the Chief Secretary to the Treasury. The Budget is only 4 weeks away!
PASA has launched a consultation on a code of good practice for DB transfers. This incorporates the guidance it published last year for straightforward cases. The code now covers all DB transfers and contains processes and example documents. The consultation is open until 30 April 2020 with the final version due to be published on 1 September 2020.
The Merchant Navy Officers Pension Fund has agreed a £1.6 billion buy-in with Pension Insurance Corporation. The deal covers 14,000 members and includes those who were previously part of a 2014 longevity swap. The longevity reinsurance is being novated to PIC as part of the deal. The scheme has now secured over £3 billion of its liabilities, leaving only £1 billion of scheme assets.
Meanwhile Allied Irish Bank’s UK scheme has secured an £850 million buy-in with Legal & General. The scheme has also agreed a further £250 million de-risking deal, under which Legal & General has insured the scheme against specific investment-related risks, in a move designed to help the scheme reach a full buy-in.
In the news this week, the CMI asks for industry views on how to allow for 2020’s mortality experience, the DWP launches a small pots working group, the autumn Budget is abandoned but the Chancellor announces new measures to help businesses, the Barclays scheme subscribes to a Barclays bond and there is another repeat buy-in.
Journey plans or glide paths may have been around for a long time but they’re at the heart of the Regulator’s proposed new funding code. In this Pensions Perspective, Leonard Bowman looks at how long-term funding and investment plans are evolving and explains why companies are increasingly taking the lead in designing an endgame strategy for their schemes.
This quarter’s Arena has a summary of our recent Pensions Perspective, “Emerging from lockdown”, which looked at how best to tackle the most common pension issues which companies are currently facing. It also shows all the usual financial and investment analysis for the quarter ending 30 June 2020.
As we keep hearing, we are living in unprecedented times. However, as we turn our attention to the future, what does the “new normal” mean for defined benefit pension schemes? In this Pensions Perspective, Leonard Bowman considers the most common pension issues that companies are facing and how best to ensure that the company approaches these on the front foot.
Covid-19 has created many challenges for DB schemes but, for those ready to transact in 2020, it may have created even more favourable market conditions for a buyout. The problem is that most schemes are not there yet. In this Briefing we look at what being “deal ready” actually means and what work it will involve.
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