Week ending 18 December 2020
The Pensions Dashboard Programme (PDP) has published its key data standards. The guide contains information on the data elements that will be required for the dashboards and is designed so that providers can get their data ready. The guide divides data into two types, “find” and “view” data.
Find data is the information pension providers will receive from the pensions dashboards system in order to match people to their pensions. This data includes a person’s name, date of birth, NI number and address. Whereas view data is the information that pension providers will have to show individuals on dashboards. This data includes the name of the pension provider, estimated retirement income, current value of a DC pot and date payable for each pension. Chris Curry, Principal of the PDP, has flagged that it is “essential that everyone starts to prepare their data now”.
The DWP has published a new consultation giving three options for increases to the general levy for the three years from April 2021. The general levy funds the Pensions Regulator, Pensions Ombudsman and Money and Pensions Service and, at present, is hugely in deficit. The three options are:
- split the levy rates for DB (and hybrid), DC and Master Trust occupational schemes. A 10% increase would apply for DB and DC schemes in 2021/22 but by 2023/24 the overall increase would be 120% for DB schemes and 50% for DC schemes!
- similar to the first option, but not splitting DB and DC schemes, so both would have a 120% increase by the third year
- retain existing structure and increase rates significantly across the board.
The first is the Government’s preferred option, with the consultation closing on 27 January 2021.
The PPF has announced that the changes it consulted on earlier in the year will be taken forward, which means a levy estimate of £520 million for 2021/22. These changes include:
- implementing the small scheme adjustment, which halves levies for schemes with less than £20 million in liabilities and tapers levies for schemes between £20 million and £50 million
- reducing the risk-based levy cap from 0.5% to 0.25% of liabilities
- continuing to measure insolvency risk on the basis introduced in April 2020, which uses credit ratings and the D&B insolvency risk model.
The cross-sector working group, set up by the Pensions Minister, has published its first report. This contains a series of recommendations for both the Government and pensions industry to combat the increase in small pots following Automatic Enrolment. One key recommendation is that the pensions industry should prioritise action on automatic and automated large-scale low-cost transfers and consolidation in the AE market. More reports are due next year.
The CMI has now confirmed how it will modify the next version of its Mortality Projections Model, CMI_2020, which is due for release in March 2021. As 2020’s mortality experience is expected to be an outlier, no weight will be placed on it in the core model of CMI_ 2020. There will be a new parameter that enables users to choose how much weight to give to 2020’s experience.
The Chancellor has announced that next year’s Budget will take place on 3 March 2021.
Two large longevity swap deals were announced this week. The Barclays Bank UK Retirement Fund has completed a £5 billion longevity swap with Reinsurance Group of America. Meanwhile the BBC Pension Scheme has completed a £3 billion longevity swap with Zurich and Canada Life Reinsurance.
There were two bulk annuity announcements too. The Maersk Retirement Benefit Scheme has agreed a full buy-in for its members with Legal & General. The £1.1 billion deal covers all of the Scheme’s 3,000 pensioners and 1,900 deferred members. The Aon Retirement Plan has completed a £510 million buy-in with Scottish Widows for pensioner members of one section of the Plan.
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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