Week ending 26 June 2020
The DWP has launched a call for evidence to review the current default fund charge cap applying to schemes used for automatic enrolment and the use of standardised cost disclosure templates. It is looking for views on the effectiveness of costs, charges and transparency measures on member outcomes. The consultation closes on 20 August 2020 with findings published by the end of the year.
In order to address industry concerns with the impact of this Bill on pension schemes (previously reported in our news of 12 June 2020) some amendments have now been made. These changes ensure that TPR and the PPF are involved following an insolvency with notification requirements and a role to ensure that the pension scheme interests are represented in any company recovery plans.
The FCA has launched a consultation on proposals to make it easier for Independent Governance Committees (IGCs) and Governance Advisory Arrangements (GAAs) to compare the value for money of pension products and services. The results of a review have also been published on the effectiveness of IGCs and GAAs in ensuring that members receive value for money. The review found a wide variation in how IGCs operate, leading to varying outcomes for members of different pension schemes. The FCA also identified some concerns about the independence of some IGCs, which meant that those members were likely to receive poor outcomes.
The High Court has ruled that the cap on deferred members’ compensation from the PPF is unlawful on age discrimination grounds. The cap currently applies to deferred members who are under normal retirement age and is currently set at £41,461. Deferred members’ benefits are also limited to 90% of their original entitlement. Members who are past normal retirement age are paid their full level of benefits in the PPF, without a cap. Affected members may be able to claw back up to six years of underpayments. This could have implications for the PPF levy in the future.
A company has won their High Court case allowing them to rectify an error, made when the trust deed and rules were consolidated, which hard-coded RPI indexation for pension increases and deferred pension revaluation. The employer managed to successfully prove that there was never an intention to provide more than statutory increases. The case was aided by a schedule of changes which accompanied the re-drafted documents and did not mention a change to pension increases. The Univar Company Pension Scheme now has permission to switch its indexation method from RPI to CPI.
In the news this week, the Regulator publishes its strategy for the next 15 years and, along with the Pensions Minister, also focuses on superfunds, whilst the PLSA launches an initiative to help make climate-aware investment easier for schemes.
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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