The CutRSS

Introducing Pensions Expert's blog – cutting through the industry noise to provide a regular dose of data, regulatory updates and comment on the issues facing UK workplace pension schemes.

Trustees must not shirk responsibility on DB transfers

Roy Murphy

From the blog: The Merchant Navy Officers Pension Fund has, in common with many other defined benefit pension schemes, seen a significant increase in transfers out of the fund since the introduction of pensions freedoms introduced three years ago under the then pensions minister, Steve Webb.

In fact, MNOPF saw a 100 per cent increase in transfers out in 2017 compared with 2016.

This trend was brought into sharp focus recently with the revelation that the Pensions Regulator has written to a number of schemes warning about excessive transfer values being paid out in some cases.

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New guidelines provide carrot and stick on DC administration

Andy Cheseldine

From the blog: As a trustee, I welcome with open arms the DC Administration Governance Guidance issued earlier this summer by the Pension Administration Standards Association.

I was part of the committee that ushered these new standards in, and they come not a minute too soon.

For too long, there has been an unhelpful inability to provide definitive and measurable guidance for those operating on the front line.

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Security and accuracy: the pillars of dashboard success

Richard Howells

From the blog: The government has called on the industry to develop a pensions dashboard before the end of 2019.

But more needs to be done to address security concerns if it is going to be a success, and it must deliver on its potential to improve consumers’ savings journey.

It is vital that the dashboard only shows personal data to the correct individual.

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How will the ageing population affect markets?

Supriya Menon

From the blog: Of all the forces set to reshape the investment landscape over the coming decades, one stands above all others – the ageing of the world's population.

There is a common view on how this demographic shift will affect investment. The general assumption is that older people are more risk-averse and more focused on drawing income.

We disagree. As people live longer they will spend more time in retirement and thus need larger pension pots.

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Time for schemes to crack down on CEO pay

Diandra Soobiah

From the blog: A few weeks ago, the High Pay Centre released its annual report on executive pay at FTSE 100 companies. Unsurprisingly the report highlighted a large increase in chief executive officer pay from 2016 to 2017 – rising by 11 per cent.

Unfortunately and even less surprisingly, workers’ pay in those companies didn’t even match inflation, rising by only 1.7 per cent.

Increasing pay disparity between top executives and those lower down an organisation is an important issue for Nest. Nearly half of our members are below the age of 35 and more than half have annual earnings of less than £20,000.

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New regulator powers will only accelerate DB disappearance

Tim Sharp

From the blog: The government has floated well-intentioned reforms intended to strengthen the arm of regulators against dodgy bosses, but the proposed changes risk undermining trustees and making further scheme closures more likely.

The consultation on strengthening the Pensions Regulator closed on Tuesday. It comes after a succession of corporate scandals, notably the collapse of BHS, and resulting cuts to pension benefits.  

One challenge is that this is not just a pensions problem. The underlying instability is caused by a corporate system that allows equity owners to act with little regard to other stakeholders, including workers and pension scheme members.

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Industry right to reject death by Isa

Angus Peters

From the blog: MPs may have migrated to warmer climes to relax during the parliamentary recess, but the civil servants at HM Treasury have evidently been working away behind the scenes.

The product of that hard work through the summer months? A rumoured policy almost no one thinks is a good idea, the care Isa. Maybe the heat got to them.

The newest addition to an ever-expanding array of savings products, the care Isa (Crisa?), which according to The Telegraph is being considered for inclusion in the government’s upcoming social care green paper, would be exempt from inheritance tax.

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Combating pension scams – It’s good to talk

Ben Fisher

From the blog: In perhaps an ironic twist last month, Northumbria Police was found guilty of not doing enough to protect one of its officers from the risk of becoming the victim of a pension scam.

As a result, they were forced to reinstate the claimant’s accrued benefits in their scheme. This could turn out to be a landmark event in what is fast becoming a landmark year in the fight against pension scams. 

Many schemes will look at this case and ask themselves if they could be doing more for their members. So, what more could they do?

Select committee's new inquiry misses the point

Rory Gravatt

From the blog: It is bizarre that the Work and Pensions Committee is questioning whether people understand the cost and value for money of their pension products when the Financial Conduct Authority has only just published research that answers their question.

Its Retirement Outcomes Review states that over a third of consumers who had opted for pension freedoms had no idea where or how their money was invested.

If someone cannot understand the simplest level of information around their contract, they have little or no chance of understanding the costs involved or any concept of value for money.

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A checklist for top bulk annuity pricing

Justin Grainger

From the blog: 2018 is predicted to see an unprecedented volume of pension schemes seeking to derisk using buy-ins or buyouts.

Given the finite resources of providers, pension schemes should expect a level of selection in what insurers will focus on – not all providers will necessarily quote on every transaction that comes to market.

This means schemes need to be well prepared when approaching the market to ensure the greatest level of interest from insurers.

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