Week ending 28 February 2020
The Pensions and Lifetime Savings Association has published its 2020 guide, providing practical guidance on the stewardship of scheme assets and how to exercise votes on key issues of concern. This guidance is timely, given the new regulatory requirements on trustees in relation to stewardship and taking environmental, social and governance factors into account in their investment decisions. The PLSA aims to help schemes hold their asset managers to account on the engagement and voting activity which is undertaken on the scheme’s behalf. The voting guidelines are intended to support schemes, as well as their asset managers and proxy voting agents, in forming judgements on the resolutions presented to shareholders at a company’s AGM.
The headline in the update to UCL’s Marmot review, 10 years after it was published in 2010, is that since 2010 improvements in life expectancy have stalled and, in some of the poorer areas of the UK, gone into reverse. The fact that improvements in life expectancy across England and Wales ground to a halt in the 2010’s was already widely known, but this report highlights the marked differences in regional life expectancy and how they have increased over the last 10 years. For both men and women, the largest decreases in life expectancy were seen in the most deprived 10% of neighbourhoods in the north-east of England whilst the largest increases were in the least deprived 10% of neighbourhoods in London. The amount of time people spend in poor health has also increased since 2010. The report highlights that the planned increases in state pension age are likely to lead to an increase in the number of people with disabilities needing to rely on working-age benefits for support.
The DWP has published its last annual report aimed at evaluating automatic enrolment. The report covers the latest evidence and analysis over the period since AE’s launch in 2012. Evidence from the contribution rate increases in April 2018 and 2019 suggests that there was no significant change in savings behaviour (i.e. no material increase in members opting out). AE’s impact in pushing up membership of workplace pension arrangements has been widely reported in earlier reports but it is worth noting that, for those aged 22 to 29, membership levels more than doubled between 2012 and 2018 to reach 85%.
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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