Week ending 18 September 2020
The DWP has published a response to last year’s consultation on ‘Investment Innovation and Future Consolidation’, which includes a further consultation and draft legislation planned to take effect from 5 October 2021. The proposals affect DC occupational schemes and are designed to improve outcomes for members, specifically of smaller DC schemes which cannot demonstrate good value. These schemes will be required to wind up and consolidate. Smaller schemes (now defined as those with less than £100 million in assets) will have to complete an updated value for members assessment, comparing the scheme to three larger arrangements, one of which would be expected to accept the smaller scheme’s members upon wind-up. The trustees will have to report to the Regulator the outcome of the assessment and any action that they are taking as a result.
The Government believes that DC consolidation is the best way to ensure that members receive both good value and good governance from their scheme and benefit from economies of scale.
All DC schemes will be required to report on net investment returns for their default and self-select funds in their Chair’s statement.
Other items included in the consultation cover easements when assessing the default charge cap to accommodate performance-related fees and to facilitate investment in illiquid assets.
The Pensions Regulator has updated its guidance on reporting late contribution payments. From 1 January 2021, TPR is asking schemes to report contributions that are 90 days outstanding (although this will not become mandatory until 1 April 2021). The current extension is to 150 days outstanding. Other types of enforcement by the Regulator, such as those relating to late preparation of audited accounts and the review of Chair’s statements, will return to normal from 1 October 2020.
The Court of Appeal has unanimously rejected an appeal against a 2019 High Court judgement, which concluded that increases in the state pension age for women born in the 1950s was not discriminatory.
In the news over the last week, the Pension Schemes Bill is at the final hurdle, automatic enrolment limits are reviewed, there is new research into trustee decision-making, the FCA sees signs of improvement in DB transfer advice and a full buy-in is completed.
This quarter’s Arena has a summary of our recent Pensions Perspective, “Endgame planning comes of age”, which looked at how long-term funding and investment plans are evolving and why companies are increasingly taking the lead in designing an endgame strategy. It also shows all the usual financial and investment analysis for the quarter ending 30 September 2020.
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.
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