The Financial Conduct Authority has delivered a defined contribution charges double-whammy this week with the release of its final rules for the default fund charge cap, plus a call for evidence on the disclosure of transaction charges.
Legal experts have said a High Court ruling charts new territory for employer covenant rules and clarifies the position of members with a final salary link, as regulators balance the needs of employers and schemes.
Problems could lie ahead for schemes seeking to qualify as 'last man standing' when completing their annual scheme returns.
LMS multi-employer schemes are eligible to pay a reduced Pension Protection Fund levy because the insolvency of an individual employer will not result in the related part of the scheme being passed on to the PPF.
But pensions lawyers have identified a discrepancy between documents issued by the PPF and the Pensions Regulator regarding the classification of multi-employer schemes as such.
There is currently a misalignment between criteria laid out by the PPF in its levy determination for 2015/2016 and a subsequent policy statement, both released in December last year.
Robert West, partner at law firm Baker & McKenzie, said: “There is some uncertainty as to whether schemes categorized in the past as last man standing will necessarily qualify… this time around.”
Any other business: Fancy a date with the pensions ombudsman? Thought not. Industry experts argue that a solid complaints procedure can save schemes time and money in the long term.
The industry has welcomed the pensions watchdog’s clarification on trustees’ duties around the new flexibilities, but some are concerned scheme administrators will face capacity issues around rising transfer value requests.
Only one in four over-55s intend to use the government’s free retirement guidance service, falling below one in 10 for women approaching retirement, in another sign of the challenge facing the system.
The last thing I saw before penning this blog was a rather downbeat commentary on Britain’s influence in the European Union.
A House of Lords EU Committee report said the UK risks punching below its weight in Brussels. But it doesn’t look like that to me.
With a new European Commission pursuing a far more positive agenda than its predecessors, and some important policy wins chalked up on the National Association of Pension Funds' scoreboard, my view is we are doing better in Brussels than we have for many years.
But their Lordships’ charge is a serious one. Even if their critique is off-target it’s no bad thing to be challenged – are we really as well represented in the EU’s corridors of power as we might be?
And even if we think we are, have we got the foundations in place to keep those links strong in the future?
The European Commission has recommended schemes be given a two-year reprieve from over-the-counter derivative clearing requirements. But industry experts still expect pension funds to end up paying higher transaction costs.
Guest blog: Almost from nowhere, pension managers and investment committees are being bombarded with class actions. But how do you manage these, and what are trustees’ duties in these cases?
Until recently, trustees have been able to maintain a distance from their involvement in class actions. This has suited them as there is a general dislike for an activity that is commonly perceived as ambulance-chasing among pension schemes.
So, why has this changed?
The main reason – and possibly the trigger for the sudden activity in the UK – is the 2010 US decision in Morrison v National Australia Bank, which limited US class actions to claims where the purchase was on a US exchange or within the US.
We have also seen a large number of US firms setting up in London with an eye on the action.
The Pensions Regulator has settled with two linked Russian companies for £8.5m over their UK pension fund obligations, prompting calls for trustees to re-examine covenant agreements.
- Aon lifestyling failure leaves members exposed to risk assets
- BA allows AVC transfer to meet flexibility demand as schemes seek middle way
- DB-DC transfer requests will rise. Here is how to handle them
- Regulator reassures on DB-DC transfers but capacity crunch predicted
- Ready or not: pensions administration post-April 2015