Week ending 11 September 2020
The Trustee of the Universities Superannuation Scheme has launched a consultation with the scheme’s sponsor, Universities UK, on the proposed methodology and assumptions to be used in setting the technical provisions for the scheme’s 31 March 2020 valuation. USS is the largest UK private pension fund, with DB assets of £67 billion at 31 March 2020.
The proposals cover a wide range of outcomes, with the potential scheme deficit ranging from just under £10 billion to almost £18 billion. Similarly, the cost of future service accrual ranges from 29% to 38% of payroll. Adding in the cost of repairing the deficit, the total contributions required could range from 41% to 68% of payroll. The funding of USS is a shared responsibility of the sponsor and members, with the current total contribution rate being 30.7%, of which members pay 9.6% of their pay.
The People’s Pension and the Police Foundation have published a report calling on the Government to:
- ensure victims of pension fraud are not hit with tax penalties, as they are at present
- give pension companies the power to trigger an “urgent regulatory response” to savers they believe are at risk of fraud
- enable regulators to override the statutory right to transfer should a suspected scam be reported to them.
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.
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