Week ending 22 May 2020
The impact of Covid-19 is clearly seen in the April 2020 inflation figures, published by the ONS this week. CPI over the year to April 2020 was 0.8%, down from 1.5% in March, whilst RPI was 1.5% in April, down from 2.6% in March. The reduction in energy and fuel pump prices was the major contributor to this month’s falls in the level of inflation. April 2020’s figures are the first to use the Covid-19 workarounds, as reported in our news of 7 May 2020, for items whose prices cannot be collected in the usual way or are temporarily not available.
TPR’s David Fairs has written a blog responding to recent calls for the Regulator to review or abandon its first consultation on the new DB funding code due to the current economic situation. He strongly disagrees, believing the principles set out in the funding consultation are the right ones and arguably even more important in the light of Covid-19. He acknowledges that the parameters for the long-term objective (discount rate of gilt yields + 0.25% – 0.5% and timescale to reach that target of 12 to 14 years) will need to be reviewed in light of the change in market conditions. The end date of the consultation, currently 2 September 2020, will be kept under review, raising the possibility of a further extension.
TPR has updated its DC scheme management and investment guidance to warn DC trustees that the temporary re-direction of contributions due to a fund closure (e.g. for a property fund) could create a new default arrangement for members!
A draft statutory instrument has been laid in Parliament granting new powers for the Pensions Regulator to obtain data from telecommunications firms. This is linked to the new Regulator powers contained within the Pension Schemes Bill and is to be used for the purpose of preventing and detecting crime, including pension scams.
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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