Week ending 20 March 2020
Covid-19 continued to decimate financial markets, as the seriousness of its impact has begun to become clearer. The Bank of England cut base rate to just 0.1%, as the Government outlined a series of measures designed to support those businesses and individuals most likely to suffer over the next 3 to 6 months. Some sponsors of DB schemes are facing serious liquidity issues and a TPR statement on how those companies and their trustees should respond is expected imminently. The PPF has also issued its own statement on Covid-19, designed to reassure beneficiaries and deal with some questions from levy payers.
Given the falls in equity markets and the reductions in gilt yields, the Universities Superannuation Scheme exceeded the threshold of its key self-sufficiency funding measure for five consecutive days and accordingly reported this to the Pensions Regulator. The trustees are now said to be considering what action is required and will do so in the context of the forthcoming valuation of the USS, which has an effective date of 31 March 2020.
The cross industry GMP Equalisation Working Group has released more guidance, this time on the timescales of when to rectify members’ GMP benefits in light of the equalisation work that will be needed and the possibility of combining the work.
ITV has lost its eight year legal battle against the Pensions Regulator and has been given six months to put financial support in place for the Box Clever pension scheme. The scheme has around 2,800 members and a £115 million deficit. The financial support will need to be approved by TPR.
In the news this week, the pensions world continues to be dominated by the impact of the Covid-19 pandemic, with the Regulator publishing more guidance for employers, the FCA delaying the implementation of its drawdown investment pathways and two household name companies deferring (or missing) their deficit recovery contributions.
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.
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