From Labour calling 'scandalous' the progress on the delivery of pension reform advice, to UK pension funds increasingly being drawn towards real assets such as infrastructure.
Keeping your mind on the long term can be a difficult business. Target date funds can help both schemes and savers do just that.
TDFs manage a person’s savings in line with when they are due to retire. So if a member is due to retire in 25 years’ time, they’ll be saving in a 2040 TDF.
This illustrates one of the easiest-to-understand benefits of TDFs: they lend themselves to straightforward communication with members on what’s happening with their money.
For the member, being in the ‘2040 target date fund’, is a subtle but unambiguous way of nudging their imagination to more distant horizons than that of any short-term movements of their pot. We believe this is helpful for pension savers.
Target date funds can also represent a mass-market offer that feels bespoke to the individual because it is clearly about building up to their retirement year.
A round-up of the pensions stories published across the FT Group this week, from African pension interest in private equity deals, to the Church of England's proposal to fuel a £100m recruitment drive using historic assets.
While not as earth-shaking as last year's historic gamechanger, yesterday's Budget included two important moves – the creation of a secondary annuity market and lowering the lifetime allowance to £1m from £1.25m.
This year's Budget was anticipated defensively following the sweeping reforms that were sprung on the industry last year.
OI OSBORNE, LEAVE OUR PENSIONS ALONE. That is all.— Tom McPhail (@PensionsMonkey) March 17, 2015
But unlike in 2014, the two main changes appeared in the press before the big day. On Monday, The Sun revealed George Osborne's intention to co-opt the plans laid out by both the Liberal Democrats and Labour to reduce the lifetime allowance.
The news that 20 Aon Hewitt defined contribution schemes have left members exposed to investment risk due to a lifestyling failure is clearly the result of an unfortunate blunder.
But it got me thinking how many DC members are making their own derisking mistakes as a result of poor engagement or simple misunderstanding.
It is estimated that 400,000 people retire in the UK every year with a DC pension. It’s also estimated that somewhere between 80 and 90 per cent of those members will be invested in the default fund, which is predicated on derisking and buying an annuity at retirement.
But a recent survey predicted just 40 per cent of retirees post-April will actually buy an annuity. So, it follows the rest should not be derisking to those safer asset classes.
By my simple calculations, that’s more than half of people heading in the wrong direction with their pension fund investment.
A round-up of the pensions industry stories published across the FT Group this week, from a predicted 30,000 job losses at the DWP, to consultants urging a departure from "toxic" Swiss bonds.
From April, savers will be faced with tough choices when it comes to drawing their pension: take the entire pension upfront, remain invested throughout retirement or buy a guaranteed income through an annuity.
Workplace pension schemes must reconsider their derisking strategy. No longer will schemes be able to move default investors into bonds on the assumption most will buy an annuity.
The solution is to derisk the workplace pension over five years, moving default investors from their growth investments to cash.
The two complement each other well. I’ll explain why…
A round-up of this week's pensions stories from across the FT group, from insurer RSA’s liabilities stymying a future break-up, to the ECB cutting the ribbon on its bond-buying program.
Video: Should the 0.75 per cent cap go lower? In part two of Countdown to April, Mark Futcher from Barnett Waddingham and LGIM's Emma Douglas explore how DC schemes are responding to reform (5:37).
Data released by the Office for National Statistics give more evidence auto-enrolment is driving up participation in pension schemes, but a growing proportion payments to defined contribution schemes languish at 2 per cent, with public sector contributions outpacing private.
The headline figures appear to be good news: we are now seeing the highest proportion of employees in workplace pensions since the series began in 1997 – 59 per cent is this year's figure, up from last year's 47 per cent.
But as this rising 'popularity' has been driven by occupational defined contribution, group personal and group stakeholder pensions, and much of that through auto-enrolment, the actual contribution levels have seen a decline.
In 2014, 33 per cent of employees with workplace pensions contributed an amount less than 2 per cent, compared with 11 percent contributing a similar amount in 2013. Defined benefit, meanwhile, continues to lose share over time.
Perhaps unsurprisingly, pensions minister Steve Webb focused on the membership figure which he described as "stunning" in a statement released by the Department for Work and Pensions today, and attributed the growth in membership "in no small part to the success of automatic enrolment".