Week ending 23 October 2020
The Pensions Regulator has published updated guidance for trustees and sponsoring employers who are considering a transfer to a superfund or DB consolidator. The Regulator encourages early engagement with itself and sets out three ‘gateway principles’ which the transaction should meet, based on those in the DWP’s consultation, namely:
- a transfer to a superfund should only be considered if the scheme cannot afford to buyout now
- a transfer to a superfund should only be considered if a scheme has no realistic prospect of buyout in the foreseeable future, given potential employer cash contributions and the insolvency risk of the employer
- a transfer to the chosen superfund must improve the likelihood of members receiving full benefits.
Ceding employers are expected to apply for clearance in relation to the transfer, with trustees expected to demonstrate they have undertaken appropriate due diligence.
The Government has responded to last year’s consultation on simpler annual benefit statements for DC schemes used for automatic enrolment, setting out the feedback it received and the next steps. There has been little voluntary adoption of the existing simplified statement template, so a consultation will be launched later this year on a mandatory approach using the two-page statement template as a starting point. The proposal for coloured pension envelopes to encourage people to open their statements has been dropped though the idea for an annual statement season (a period of time when all workplace pension statements would be sent to members) is still in favour.
The Old British Steel Pension Scheme has agreed a £2 billion buy-in with Pension Insurance Corporation, covering the liabilities of over 30,000 members at or above PPF compensation levels. The scheme is planning to complete a buyout by the end of 2021 and, at that stage, exit its PPF assessment period.
The Ibstock Pension Scheme has completed a £340 million buy-in with Just, covering 1,800 pensioners who represent 50% of the Scheme’s liabilities.
In the news this week, the second Lloyds judgement says that historic transfer payments need to reflect GMP equalisation, the Pension Schemes Bill moves back to the Lords, TPR gets tough on AE compliance, the FCA surveys DB transfer advisers again and another 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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