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, the DWP confirms its determination to bring about DC consolidation of smaller schemes, the Regulator ends more of its Covid-19 easements and the Court of Appeal rejects the claim that increases in the state pension age of women born in the 1950s was discriminatory.
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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