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.

Pru exit doesn't signal death of annuities... yet

Angus Peters

From the blog: Insurance giant Prudential is leaving the UK annuity market, but analysis of ‘at retirement’ product offerings show that guaranteed income still has a significant role in the post-freedom and choice savings world.

 

As the UK’s largest insurer by market capitalisation, it is tempting to read the company’s exit as a sign of the death of annuities, brought about by a trifecta of low interest rates, poor value for money and consumers flocking to take advantage of new freedoms.

 

Indeed investment consultants will often recommend retaining equity exposure in default funds for older savers, in recognition of the fact that many leave some money invested after first drawing a pension.

 

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Should ESG be a default for DC schemes?

Stuart O'Brien

From the blog: As we move further into 2017, everyone is making bold predictions about what the year will hold in terms of pensions.

 

Auto-enrolment will soon enter its busiest phase, while the increasing shift from DB to DC schemes as the focus of regulation will continue.

 

This shift is also likely to extend to matters concerning environmental, social and governance factors.

 

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We can't ignore the intergenerational dilemma

Mark Smith

From the blog: What do judges and firefighters have in common? No, this is not the start of a joke. 

 

The Employment Tribunal ruled last month that transitional provisions made on the change in pension arrangements for judges amounted to unlawful age discrimination. 

 

The government had failed to heed advice that selecting a particular age group for preferential treatment would constitute direct age discrimination.

 

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LGPS funds tackle a range of challenges head on

Andy Todd

From the blog: More than half of global public pension funds with assets under management of $10bn (£8bn) or more feel under pressure to cut costs.

 

This is particularly pertinent to the UK market, where central government is promoting the consolidation of assets within the Local Government Pension Scheme into eight distinct asset pools.

 

The good news is that various contributing factors, including this pooling initiative, are allowing funds to become stronger than ever before and meet challenges head on with insight and proactivity. 

 

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Are the select committee’s DB recommendations workable?

Clive Weber

From the blog: The Work and Pension Committee’s defined benefit report is exceptionally well written, but are any of its main recommendations actually workable?

 

Broadly speaking, some are eminently workable, others are problematic, and the remainder are probably pipe dreams.

 

Pressure on parliamentary time will increase due to Brexit, so pension reforms needing only policy changes through the Pensions Regulator or Pension Protection Fund, and regulations rather than new acts of parliament, may stand a better chance of success.

 

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Courts, regulators and judicial reviews

Fenella Morris

From the blog: The threat of judicial review is ever-present for regulators, and this is as true in the pensions sphere as in any other. 

 

Inevitably those subject to regulation will be concerned to ensure that decisions made by their regulator are procedurally fair, proportionate, rational and consistent. 

 

These concerns are bound to be intensified by the size of the sums of money and significance of the commercial interests at stake where pensions are concerned. 

 

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Mastertrust regulation: The devil will be in the detail

Phil Boyle

From the blog: No one wants to be reading stories about pension scheme members suffering financial loss as a result of being enrolled into poorly managed mastertrusts. 

 

The new regulations for mastertrusts are therefore to be welcomed. 

 

But the devil will be in the detail, and it will be interesting to see how some of the criteria are expanded upon. 

 

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Buy-ins and buyouts: The quiet revolution

Charlie Finch

From the blog: We reached a new milestone in late 2016: the pensions of more than 1m people in the UK are now insured through a buy-in or buyout.

 

A quiet revolution has been playing out, of which many of those individuals will be unaware, providing increased security for member benefits. 

 

It is now a decade ago since a range of new insurers opened up the bulk annuity market and schemes began in earnest to insure their obligations through buy-ins and buyouts.

 

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Partial transfers would bring more choice into DB

Sophia Imeson

From the blog: While many people have been rushing recently to cash in their final salary pensions, others are still torn between sticking with a guaranteed income and transferring all of their benefits. 

 

Plummeting gilt yields have contributed towards record rises in transfer values over the past year.

 

Partial transfers are relatively uncommon, but should more schemes start to offer them? Members who are lucky enough to have the option of choosing a partial transfer are able to take out part of their pension while having the certainty of keeping the remainder in a defined benefit fund.

 

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Is good pensions practice drowning in policy consultations?

From the blog: The run up to Christmas saw a flurry of political activity to cap off what has been an exhausting year, with two separate Department for Work and Pensions consultation launches complemented by the Work and Pensions Select Committee’s report on defined benefit.

 

Indeed, a cursory glance at the DWP’s website reveals that there have been almost twice as many pension consultation announcements released over the year than the pre-2016 average.

 

Plenty of stories to keep financial journalists busy then, but are schemes able to keep up with the sheer pace of legislative review and change?

 

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