Week ending 9 April 2020
The Regulator has published more guidance for employers about automatic enrolment in the current climate. This guidance is in response to requests for clarity regarding AE duties, pension contributions and the pensions element of the Coronavirus Job Retention Scheme. The Regulator reiterates that it wants to help employers keep going and will take a proportionate and risk-based approach towards enforcement against those who fail to meet their duties.
In light of Covid-19, the FCA has decided to delay the implementation of its final set of Retirement Outcome Review remedies. These include the introduction of four standard investment pathways for non-advised customers entering drawdown. The implementation date is now 1 February 2021. The FCA has also provided guidance for firms on risk factors in the current climate and implications that firms should make customers aware of. Guidance is also provided on its expectations of advisers giving DB transfer advice during the Covid-19 crisis.
The FCA has also published its 2020/21 business plan which identifies significant risk of harm to customers in the pension and retail investment sectors, partly as a result of the introduction of pension freedoms. It recognises the increased risk of harm due to the current volatile investment markets. To combat this, the FCA is consulting on a customer harm campaign designed to help customers make better informed investment decisions.
Reach (which publishes the Daily Mirror and more than 150 other newspaper titles) has become the second large company which is reported to be asking the trustees of its DB schemes to defer deficit recovery contributions. The company’s six DB schemes had a combined deficit of £702 million at their last valuations. Reach was due to pay £49 million in contributions this year. It is also furloughing staff, reducing pay and cancelling the final dividend for 2019.
Debenhams announced its intention to file for administration and reportedly missed paying its April 2020 deficit recovery contribution in the current harsh retail environment for non-essential stores. Two company voluntary arrangements were previously agreed in May 2019. The trustees are now consulting with the Regulator and PPF.
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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