Week ending 3 July 2020
Four Opposition-sponsored amendments have been made to the Bill at the report stage in the House of Lords:
- a requirement to treat open defined benefit schemes differently from closed defined benefit schemes, ensuring that their closure is not accelerated
- ensuring that the publicly run MaPS dashboard has a year of operation before other providers can launch their versions
- stopping pension dashboards including a provision for financial transactions
- requiring trustees of collective money purchase schemes to report on the fairness to members of their scheme’s operation.
The Bill will move on to its Third Reading in the Lords and then to the House of Commons, with more changes likely.
In its 2020 analysis for Tranche 15 valuations, TPR’s modelling highlights that, due to the impact of Covid-19, schemes undertaking triennial valuations at 31 March or 5 April 2020 are likely to show a worse funding level and deficit compared to those they reported three years previously. If Tranche 15 schemes all had 31 March 2020 valuation dates and were to retain their recovery plan end dates, TPR estimates that the median required increase in deficit contributions would be between 50% and 75%. Around 20% of such schemes would need to increase deficit contributions to more than three times their current level!
The Regulator has finally published its corporate plan for 2020-21, which needed significant revision to reflect the challenges of the Covid-19 pandemic. It looks forward only one year, rather than the usual three.
The Willis Pension Scheme has agreed a longevity swap with Munich Re to cover around 3,500 pensioner members and about £1 billion of liabilities. The risk was transferred via a captive insurer, based in Guernsey, which is fully owned by the Scheme’s trustee.
Meanwhile the IPC Media Pension Scheme has completed a £290 million pensioner buy-in with Rothesay Life.
In the news this week, pensions tax relief is back in the spotlight, the Treasury publishes draft legislation for CDC schemes and a big 4 accountant looks to temporarily reduce its DC contributions.
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.
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.
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