Week ending 17 April 2020
The Institute and Faculty of Actuaries’ Continuous Mortality Investigation has moved to weekly monitoring of deaths due to the Covid-19 pandemic. In the first three months of 2020 standardised mortality rates in England and Wales were tracking closely to those for 2019. However, the CMI’s first weekly report shows that things were very different in the week ending 3 April 2020. In that one week the number of deaths was 59% higher than expected, which was more than 6,000 additional deaths. The CMI goes on to estimate that, by 13 April 2020, there could have been more than 25,000 excess deaths (i.e. relative to those expected if standardised mortality rates had been the same as in 2019) across the UK as a whole. These are not necessarily all linked to Covid-19, but many surely are.
The Regulator has published more guidance on its general approach to reporting duties and enforcement during the Covid-19 pandemic. Crucially, it sets out the main areas where easements do not apply.
Along with other cost-cutting measures such as salary reductions and furloughing staff, the Financial Times has reportedly decided to temporarily reduce its DC matching contributions in response to the Covid-19 pandemic. The reduction is from a level of two times to once times employee contributions and will take effect from May and last until January 2021.
The Co-operative Pension Scheme (PACE) has agreed a £400 million buy-in with Pension Insurance Corporation (PIC). This deal, concluded during April, covers around 2,000 members of the bank section of PACE. It is the third bulk annuity this year for PACE, with a £1 billion buy-in with Aviva announced in January and a £1 billion buy-in with PIC announced in February, those previous deals being for the Co-op section of the scheme.
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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