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.

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.

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Cash flow management is DB's new admin headache

Toby Clark

From the blog: The balance of payments for defined benefit pension schemes has shifted. With estimated active DB members numbering less than 500,000 and more than 5m members in receipt of their pension, most DB schemes have a negative cash flow.

As contribution receipts dwindle and payrolls increase, administrators, trustees and investment consultants are working more closely than ever to ensure cash management policies keep the treasury wheels turning.

Two fundamental starting points to consider are the acceptable level of deposit cash, commonly held at very low-interest rates, and how quickly access to top-ups can be obtained.

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When member engagement should take a knee

Getty Images

From the blog: Pension schemes are under increasing pressure to invest responsibly. On this side of the pond, this discourse largely revolves around environmental and social investment.

But in the US, ethical investing has taken a very different shape at one fund. Last month, a retired police officer called upon the council responsible for New Jersey's public pension fund to review its holdings in sportswear giant Nike.

Marty Barrett, who sits on the board of trustees for the Police and Firemen’s Retirement System of New Jersey, reportedly objected to a Nike advertisement featuring American football star and civil right campaigner Colin Kaepernick.

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Financial wellbeing means stepping beyond pensions

Darren Laverty

From the blog: It is fair to say employers have been thinking about financial wellbeing for years – even before auto-enrolment offered most a workplace pension, and perhaps some other monetary protection benefits, such as life assurance or income protection.

But for many employees, this feeling that they are supported in their financial wellness is at best forgotten, and all too often invisible, soon after the initial orientation into their new job.

Your employee’s financial health has a huge impact on them, and in the long term poor financial health is likely to impact on your business. So, it makes perfect sense to support employees with their financial wellbeing.

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UK gilts: The inconvenient truth for schemes

Barbara Saunders

From the blog: Gilts have been a perennial favourite for UK pension schemes, not simply for their liability-matching properties, but also because of the returns they have delivered for schemes in years when markets have wobbled.

However, what was once a classic trade in times of trouble for risk markets now looks less compelling.

The unfortunate truth is that after years of declining yields (and corresponding gains for investors) the market environment has shifted significantly since the last downturn.

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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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