Week ending 5 June 2020
Two large defined benefit schemes plan to close to future accrual. The Nationwide Building Society scheme will close to future accrual on 31 March 2021, with employees joining the Nationwide’s group personal pension for future service. It has been reported that all DB active members at the date of closure will be offered the choice between a cash lump sum or a contribution to their pension savings. Meanwhile, it has been reported that Nissan is currently consulting on the closure of its DB scheme.
From August 2020 the CJRS will be changing so that employers will need to contribute an increasing amount each month. In August employers will need to pay the employer national insurance and pension contributions for furloughed employees. In September employers will also have to pay 10% of a furloughed employee’s monthly salary, up to a cap of £312.50. In October this will increase to paying 20% of salary, up to a cap of £625. The CJRS ends at 31 October 2020 but will close to new entrants on 30 June 2020.
The FCA has published a policy statement setting out new rules and guidance to improve the suitability of pension transfer advice. The rules focus on DB to DC transfers and ban contingent charging, except in very limited circumstances. The FCA still believes that the level of transfers out of DB schemes is too high. The new rules require firms to demonstrate why an available workplace pension scheme is not being used to receive a transfer and improve the disclosure of advice charges. Most of the new rules are effective from 1 October 2020. There is also a guidance consultation published to improve the quality of transfer advice, including best practice and case study examples.
The CMA has updated its website to show the process and timings for the compliance statements required under its 2019 order, which followed its investigation into the investment consulting and fiduciary management sectors. Trustees have until 7 January 2021 to submit their compliance statements on the strategic objectives set for their investment consultants to the CMA. However, if the DWP enacts legislation to implement the CMA order before January 2021, the compliance statements could be made through the scheme return instead.
In the news this week, the CMI asks for industry views on how to allow for 2020’s mortality experience, the DWP launches a small pots working group, the autumn Budget is abandoned but the Chancellor announces new measures to help businesses, the Barclays scheme subscribes to a Barclays bond and there is another repeat buy-in.
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.
Unit 13A | Church Farm Business Park | Corston | Bath | BA2 9AP | Telephone: +44 (0) 1225 481450
Registered Address: 37 Great Pulteney Street, Bath BA2 4DA | Company Registered in England & Wales Company No. 07975135