Pensions Regulator: Updated guidance for trustees of DB schemes when investing scheme assets. The new guidance will replace the previous version which was issued in March 2017. Key changes include new disclosure requirements concerning financial material and non-financial factors and schemes stewardship activities to be included in the SIP. Another key change includes the requirements to set objectives for investment consultants and fiduciary managers. See guidance
Pensions Regulator: regulatory intervention report concerning chair's statement and the issuance of fines. By law, a chair's statement must be produced within seven months following the end of each scheme year. The Regulator's report reveals the need for details from trustees to demonstrate their compliance with the law in the face of greater scrutiny from the Regulator.
Pensions Regulator: findings on public service pension schemes. The main risks identified were risk which related to governance, record keeping, protection from scams and member communications.
Regulations to enhance transparency: Shareholders Rights Directive II. Currently, trustees of occupational pension schemes with at least 100 members are required to produce a statement of investment principles (SIP). The new changes mean that more schemes will need to address key topics on stewardship, voting, engagement and monitoring as well as how schemes work with their asset managers. This facilitates comparisons between schemes and for members to engage with other stakeholders so that they can better understand their investments, free of charge.
PPF: consultation on draft levy determination for 2020/21. Estimations include the total levy increasing by 8% to reach £620 million. This increase reflects external factors such as the decline in gilt yields which has reduced scheme funding levels and increased risk for the PPF. Only "necessary" changes have been made to current rules, with the consultation closing on 5 November 2019.
DHSC: NHS Pension scheme consultation on increasing flexibility. The consultation opened on the 11 September 2019 to address the annual allowance and lifetime allowance issues for senior staff within the NHS who are turning down work because of the adverse tax consequences. This consultation looks at the eligibility for a flexible accrual option be contingent on meeting two tests and makes clear decisions on unused employer contributions will remain a matter for individual employers to take, but that they must be alive to equality and affordability issues. See consultation
HM Treasury: Chancellor to consult on the date of the retail price index (RPI) reform. There has been a request to review the existing flaws and concerns with the use of RPI. The Chancellor's UK Statistics Authority's (UKSA) proposal to bring forward legislation to abolish the RPI altogether has been rejected. The government will consult publicly on this and whether the changes should be made before 2030.
HMRC: Annual allowance. 37,300 pension savers affected by the annual allowance charges in 2017/2018 which was an increase from 23,800 in the previous year. The data also showed an increase in those affected by the lifetime allowance and commentary around these statistics provided that in order to avoid a generation of DC disappointment, there needed to be good employer accountability.
Investment Association (IA): Thirty FTSE 100 companies cut pension contributions. The IA have found that 30 out of the 100 FTSE companies have made "significant changes" as a result of the guidance their guidance to pay executive directors pension contributions in line with the workforce. This will mean that the UK's biggest companies will be required to disclose and explain excessive executive pay and diversity on boards.
Pensions Management Institute (PMI): Industry divided on introducing mandatory requirement for professional trustee on all schemes. The latest "PMI pulse" has shown that 50% of pension professionals believe the Regulator should make it obligatory to have a professional trustee which would help raise overall standards. The survey found that 50% of responses felt that it should be mandatory for professional trustees to be brought in within the next five years but that 77% of respondents felt the pensions sector is currently unable to meet demand and that there would be a cost implication in doing so. See link
Pensions Regulator: prosecuting a businessman for failing to provide information on his companies. The Regulator issued two notices under section 72 of the Pensions Act 2004 following allegations that staff had not had their workplace pension contributions paid by the company. This businessman faces two charges of neglecting or refusing to provide information without a reasonable cause contrary to section 77(1) Pensions Act 2004. See notice
Mercer's Pension Fund: FTSE 350 pension deficit reaches two-year high. The deficit of FTSE 350's defined benefit pension schemes increased by £16 billion in August. The deficit has therefore reached a two-year high of £67 billion. A partner at Mercer's urged stakeholders to take an "active approach" to monitor scheme funding positions.
Hymans Robertson survey findings: trustees facing challenges implementing new investment regulations. This survey revealed that 91% of trustees are facing challenges with the implementation of the Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018. The main causes for concern include the lack of clarity around the Regulator's expectations, low member engagement, limited time and resources and difficulty in understanding the language used in the Investment Regulations, albeit trustees recognised the benefits of conquering this for members.
AON analysis: 60% of schemes that completed valuations. Analysis was done on schemes that had completed funding valuations up to July 2019, has revealed 60% of 108 schemes have had a long-term funding target, with 80% targeting self-sufficiency and 20% targeting buyouts. Two thirds of schemes adopt an integrated approach to risk management.
Upcoming key 2019 dates:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.