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.

Where next for the pensions dashboard?

From the blog: According to the Department for Work and Pensions, the average Briton has a total of 11 different jobs throughout their career. That could mean 11 different pensions during your lifetime.

For most people, keeping track of multiple pension funds and investments is an unenviable task.   

Having a central pensions dashboard aims to resolve this issue and ultimately make people more engaged with their retirement savings.

But with the government’s long-awaited feasibility report into the dashboard finally being published nine months after it was first expected, questions still remain about to how to get the dashboard from an idea to a reality.

Top tips for a successful approach to the bulk annuity market

Jane Kola

From the blog: 2018 is set to be a record-breaking year in the bulk annuity risk transfer market.

The transaction total for pension scheme buy-ins and buyouts is expected to exceed £20bn by the end of 2018, according to Hymans Robertson research, and there are predictions that 2019 will surpass this record.

There is no question that there are more schemes chasing buy-in deals than there are insurers willing to write that business – the long-predicted capacity crunch has arrived.

For well-funded schemes who are new to this market, the crunch in insurer capacity means trustees need to prepare their scheme for sale.

SRD II: A blockbuster sequel

Hans-Christoph Hirt

From the blog: It is often said that a sequel is never as good as the original. While that might be true for some films, the new European Shareholder Rights Directive is a welcome revision of 2007’s first instalment.

The goal of the original Shareholder Rights Directive was to give shareholders consistent rights at annual meetings and when voting.

The amended version, published in May 2017 and due to be implemented in EU member states in June 2019, takes this further. With less than a year to go, UK pension funds should be assessing the upcoming changes and considering how the upgrade will impact their role as stewards. 

What to expect from master trust supervision

Jacqui Reid

From the blog: An unprecedented number of employers and trustees are looking at transfers of employees’ defined contribution pension benefits into master trusts.

Furthermore, employers are increasingly opting for a master trust solution for future pension provision as a way of reducing scheme governance costs. 

At the same time, we are also seeing trustees, in conjunction with their employers, either looking at master trusts as a way of managing their deferred DC population, or directing retiring members who wish to pursue drawdown outside the scheme towards master trusts.   

Why fiduciary management needs total transparency

Richard Dowell

From the blog: The Competition and Markets Authority has taken a few small steps, but one giant leap is needed to improve outcomes for UK pension funds.

The CMA’s provisional decision report proposed much-needed remedies to the UK’s investment consulting and fiduciary management industry, and were a clear step in the right direction.

There is, however, an opportunity for the CMA to make a bigger impact and help the industry take a giant leap forward.

Recommendations to introduce compulsory tendering, fiduciary management performance standards and enhanced trustee guidance have certainly made the industry sit up and think.

With a few tweaks to the proposals, the positive impact of the remedies should be widely felt.

ESG: Focus efforts from a risk perspective

Joshua Kendall

From the blog: Every institutional investor should be following a responsible investment approach.

Responsible investment means better managing risk and seeking out more sustainable long-term returns by incorporating a greater number of risk factors, such as environmental, social and governance issues, into investment decisions.

This is fundamentally sensible; ignoring potentially material risks should not be a serious option and may negatively impact performance over the long term as ESG factors become priced by market participants, such as credit rating agencies.

What greater regulatory scrutiny means for small schemes

Vikki Massarano

From the blog: In addition to announcing its new “tougher” stance, the Pensions Regulator has said it will take a more proactive approach to smaller schemes’ compliance with its requirements and expectations.

This followed a survey of defined benefit schemes’ approach to the Pensions Regulator’s DB funding code of practice, showing that while most schemes are currently following the regulator’s standards of governance, smaller schemes are lagging behind.

The regulator has concluded that smaller schemes tend to have poorer governance standards, particularly around assessing trustee fitness and performance, and in relation to taking and managing funding risk.

Patient capital in DC: Worth the risk?

Maria Nazarova-Doyle & Tim Sharp

From the blog: Philip Hammond's desire to increase the allocations of defined contribution schemes to 'patient capital', including high-risk venture capital, have proved a divisive issue in the pensions industry.

DC schemes have long clamoured for access to illiquid assets, but the prospect of watered-down protections on costs and charges have had some up in arms.

Pensions Expert asked JLT Employee Benefits' Maria Nazarova-Doyle and the Trades Union Congress' Tim Sharp for their views on whether greater access to patient capital will be a boon or a burden to DC savers’ retirement outcomes.

ESG investing: the temperature is rising

From the blog: From October next year, trustees will be required to make public their policy on environmental, social and governance considerations, to the extent that these may have a material impact on the financial performance of their scheme's investments.

However, even before this trustees need to consider how they can demonstrate that they are taking ESG investing seriously, as the risks associated with paying lip service to it are increasing.

In the UK, ClientEarth are supporting members who are requesting information about their scheme's approach to ESG matters and are threatening legal action if the response is deemed inadequate.

Click here to read the full blog post

In defence of the tax relief status quo

Christopher Stiles

From the blog: Speculation over the future of tax relief on pension contributions never goes away.

The case for reform has been well made by various bodies, but there is a good case for leaving tax relief well alone.

The original purpose of tax relief was simple, and often overlooked in this debate: it is to avoid double taxation.

Click here to read the full blog post