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.

Private equity: Success brings new challenges

Marta Jankovic

From the blog: Last year, European private equity fundraising reached €74bn (£66bn), the highest level since 2008. 

 

Pension funds directly accounted for more than a third of this capital.

 

However, while the overall fundamentals are strong, there are concerns that could dampen appetite for European private equity.

 

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Ethical investing: All talk and no action?

Sophia Imeson

From the blog: Ethical investing has come to the fore in recent years as more people say they want to align their investments with their moral values, but there are still some obstacles on the way there.

 

The Good Money Week aims to raise awareness of responsible, ethical and sustainable finance. Its website argues that “it doesn’t cost extra to choose good banks, pensions, savings and investments. It is just a matter of choice – like where you buy your coffee or food”.

 

But it is difficult to make a choice when there is little to choose from.

 

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Path to new savings culture needs change of direction

Catherine Howarth

From the blog: In his recent article, ‘A pension system to support everyone’, pensions minister Guy Opperman highlights the impressive achievements of pensions auto-enrolment. It’s a huge success story for both government and the pensions industry.

 

The minister’s article also claims that AE is “generating a new savings culture across the UK”. This, I suggest, is a claim too far.

 

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New rules on profit-shifting could affect pensions

Matthew Giles

From the blog: As demands for companies to be more tax transparent have built momentum, international reforms are being formulated that could impact tax strategies and dramatically change sponsor covenant.

 

While these reforms might present a headache for some C-suite executives, they could also make the job of a pension plan trustee easier when assessing the value and strength of the sponsoring employer, particularly where that employer is part of an international group of companies.

 

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Was the financial crisis all bad news for pensions?

Sarah Brown

From the blog: Ten years on from the financial crisis, we are only now seeing the full implications for pensions. It seems a bleak picture. With gilt yields remaining at historic lows, many schemes have seen deficits and contribution requirements balloon.

 

High profile failures have been a key theme of recent times and have led to even more questions about the state of pensions.

 

Although the financial crisis can be blamed for some of the issues we face, are pension scheme members actually suffering because of these changes? 

Trustees cannot ignore deferred members abroad

Bethell Codrington

From the blog: The press is full of reports surrounding the transfer of defined benefit schemes to defined contribution or personal pensions. What has been massively overlooked is trustee responsibility to deferred members who are no longer UK residents.

 

The UK has a tradition of employing migrant workers not just from the EU, but globally. A large number of them return home after a period in the UK, either to retire or carry on with careers elsewhere with no intent to return – as residents – to the UK. 

 

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Trustee standards – an impractical election fever

Colin Richardson

From the blog: There is much debate on how to improve trustee standards. Recently, the highly respected Kevin LeGrand floated some ideas.

 

Some of the suggestions LeGrand made were good. He suggests trustee chairs should be professional trustees – which as a professional trustee I would of course wholeheartedly support.

But he goes on to say they "should be selected by the sponsor from a pool elected by the membership", which might not be very practical. 

 

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It's time to rethink trustee standards

Kevin LeGrand

From the blog: The Pensions Regulator’s recent findings of large variations in trusteeship standards have thrown up questions about the governance of pension funds.

 

More specifically, member-nominated trustees present a challenge. A board undoubtedly benefits from the presence of lay trustees bringing a different and more personal perspective.

 

However, the flipside of this fresh approach is the need to bring them up to speed on the complexities of running a workplace pension scheme.

 

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Check for early warning signs of pension mistakes

Steve Butler

From the blog: It's the nightmare scenario: the Pensions Regulator is due to visit and everyone at the company is filled with dread. What's worse, they were right to be concerned.

 

Following an audit, it came to light that many employees had been wrongly categorised during auto-enrolment. The company in question was non-compliant and at risk of being hit with a very hefty fine. This is a common story.

 

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Are DGFs really diversified?

John Huss

From the blog: Over the past five years, diversified growth funds have generally performed well. In fact, all three median DGF series compiled by Camradata met or exceeded their return targets from January 2012 through December 2016.

However, this success appears to have been largely driven by strong stock and bond market returns.

The broad DGF universe has been highly correlated (often as high as 0.9) with a currency-hedged traditional global 50 per cent stock, 50 per cent bond portfolio.

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