June 2010 | PensionsWorld

Analysis

Ins and outs

The revolving door at the Department for Work and Pensions turns again. Ceri Jones, financial journalist, considers the consequences of the general election and the coalition

While the election had serious consequences for pension reform continuity as experienced MPs with a good understanding of the issues lost their seats, one interesting feature is the weight of pensions experience in the Liberal Democrat line up....

Book reviews

High drama

The Great Pensions Robbery by Alex Brummer (226 pages) ISBN 978 1 847 94037 7, £12.99 from www.rbooks.co.uk Written in the style of a gripping thriller, the Great Pensions Robbery by Daily Mail city editor Alex Brummer is highly readable,...

Death – where is thy sting?

What to do when someone dies by Anne Wadey (216 pages) ISBN 978 1 84490 072 5, £10.99 from www.which.co.uk “Death is always a shock, even when it is expected. Knowing what to do can help – even if just a little” says the...

Definitive guide

Pensions Law Handbook 9th edition by the Nabarro Pensions Team (899 pages) ISBN 978 1 84766 382 5, £85 from www.bloomsbury professional.com This authoritative work is a definitive guide to UK pensions law and practice. It deals with the...

Comments

Coalition!

Nearly half the new intake of MPs are rookies. Editor Stephanie Hawthorne urges joint action to make sure they put pensions before politics

As I write this comment, the Liberal Democrats have been flirting with their rival Labour and Conservative suitors, along with hopeful bridesmaids from assorted nationalist parties before settling for a Yellow/Blue Coalition. Pensions almost got...

DC focus

DC FOCUS Bringing retirement to life

Emma Douglas, BlackRock, on the importance of entering into the member’s mind’s eye of their retirement

There is a significant lack of engagement from employees when it comes to pensions. Fewer than 50% of workers even regard them as the main way to save for retirement. This is one of the key findings of joint BlackRock and Chartered Institute of...

DC FOCUS Creating a framework

Neil Davies, AEGON UK, looks at the increasing importance of governance for defined contribution schemes

There has been an increasing level of comment recently in the pensions press around scheme governance. While governance has been commonplace in the trust based market for some time, it remains voluntary for contract based schemes. However, having...

Debrief

DC Useful milestones

Members need helpful markers on the road to retirement suggests Will Aitken, Towers Watson

For too long, we have worried about the defined contribution (DC) journey, but not the destination. That is changing. By knowing where we want to get to, we can get a much better picture of whether we will get there and what shape we will be in...

Features

ANNUITIES Only time will tell

With so many changes in the market, it is difficult to forecast when is a good time to buy an annuity cautions Karin Brown, Prudential

The question of when to buy an annuity has never been more important than in today’s market environment. The obvious issues aside – how interest rates and equity prices will move – the impact of regulatory change will make a big...

VENTURE CAPITAL TRUSTS Alternative relief

Tax efficient venture capital trusts are poised to benefit as pensions relief is reduced for high earners, says Steve Tuckley, Beringea

The UK government’s changes to pensions relief in 2009 have been well documented. Higher earners with relevant income over £180,000 a year will see tax relief on pension contributions reduced to 20% from 40% with effect from 6 April...

DB SCHEMES Sizing up the situation

Small schemes need just as much help as their larger counterparts when it comes to scheme governance according to Ken Tymms, Grove Pension Solutions

The Pensions Regulator (TPR) is focusing on governance standards in smaller schemes. For example, in this year’s consultation on “internal controls”, the phrase “smaller schemes” is used more than 20 times! Trustees...

PENSIONS ADMINISTRATION Eastern promise

India is proving to be the right location for offshoring for a number of UK pension firms. Mark Adamson, JLT, explains why

With what seems like a limitless annual supply of graduates (four million according to official statistics), India provides intelligent, aspiring, articulate and well educated young men and women determined to succeed, helping the country to...

CORPORATE INVESTMENT PLATFORMS Personal service

Can platforms deliver for trustees? Dominic Fryer, Friends Provident, serves up some answers

Before we can assert whether platforms will fully deliver for trustees, we need first of all to examine the seismic shift in responsibility for investments that has occurred in the UK pensions market in recent years. This transference will help...

PENSION PROVISION Workplace saving

What do workers want from employer benefits? Ann Flynn, Scottish Widows, reports on recent research

Amazingly, many employees still do not engage in quality employer sponsored pension schemes despite matching contributions. Indeed just over 50% of people in the UK are saving enough for an “adequate” retirement*. For some, the...

Mutual understanding

Stuart Faloon, Mercer, on how to identify the most appropriate strategy for managing risks inherent in your pension scheme

Pension scheme decisions are often based on the size or maturity of the scheme, or the resources (both financial and physical) available to the trustees. But how often are decisions based on real engagement between trustees and employers,...

SPOTLIGHT ON DE-RISKING Mutual understanding

Stuart Faloon, Mercer, on how to identify the most appropriate strategy for managing risks inherent in your pension scheme

Pension scheme decisions are often based on the size or maturity of the scheme, or the resources (both financial and physical) available to the trustees. But how often are decisions based on real engagement between trustees and employers,...

Investment brief

INVESTMENT BRIEF Rights issue

Resistance to UK based shareholder class actions similar to those in the US seems to be weakening says Anthony Hilton, Evening Standard

Litigation by shareholders against companies and their boards is commonplace in the United States, but traditionally has been thought to be not quite British. The Association of British Insurers (ABI) in particular tended to discourage such...

Knowledge bank

Statistics - June 2010

STATISTICS TABLE

Buying out benefits

Trustees cannot take advantage of the existence of the PPF when making wind up decisions explains Laura Hickman, Eversheds

The duty to act in the best interests of beneficiaries is crucial to trustee decision-making, but how far can trustees go to protect these interests in the knowledge that the Pension Protection Fund (PPF) is there as a lifeboat? The recent case of...

TRUSTEE TOPICS To pay or not to pay?...

Navneet Bassan, PricewaterhouseCoopers, looks at the findings of the latest trustee pay survey

“Trustee Knowledge and Understanding”, four words, which have led to a huge increase in the responsibilities of pension scheme trustees. Set against a background of unprecedented turmoil in the economic environment, this development...

TAX & BENEFIT NOTES Regime change

Neil Fairchild, Hewitt, considers the pension challenges facing the new government

The electorate has cast its votes in what was the tightest contest for more than a generation. The new government – a Conservative-Liberal Democrat coalition – will be faced with a pensions landscape that has begun to change as...

Discrimination defined

Equality Act 2010 – the issues for pension schemes

The Equality Act 2010 aims to consolidate and simplify existing discrimination and equality legislation and to strengthen the law in this area. The majority of the provisions are expected to come into force from October 2010, although some have...

Napf update

NAPF Update

What’s in store for pensions from a new Government

May was a golden month for the Westminster Press Pack. Front pages were regularly ‘held’ as the negotiations between the major parties took yet another new twist, and political correspondents rushed to write up their copy. Never mind...

What’s in store for pensions from a new Government

May was a golden month for the Westminster Press Pack. Front pages were regularly ‘held’ as the negotiations between the major parties took yet another new twist, and political correspondents rushed to write up their copy. Never mind...

News

In brief - June 2010

Fewer members According to the Office for National Statistics, 50% of UK employees were members of an employer sponsored pension scheme in 2009, a drop from 55% membership in 1997. Since 1997 the number of employees with defined benefit plans...

Coalition sets out stall

Within a day of its formation, the LibDem Conservative coalition announced its pensions policy. It will restore the earnings link for the basic state pension from April 2011 with a “triple guarantee” that pensions are raised by the...

Trustees could face £500,000 fine

Under new rules trustees could face fines of up to £500,000 if they fail to meet data protection requirements. Richard Butcher, managing director at Pitmans Trustees Ltd, commented: “In May many of the provisions of the Criminal...

IASB rule change could cause £multi-billion balance sheet hole

Most companies would have to report higher pensions costs under proposed changes to accounting rule IAS 19 expected from the International Accounting Standards Board (IASB). PricewaterhouseCoopers (PwC) estimates that combined pension costs for...

M&S initiates £800m funding plan for its pension scheme

Marks and Spencer Group (M&S) and the trustees of its UK defined benefit pension scheme, advised by Deloittes, have agreed a funding plan with a present day value of £800m. The funding plan includes the following contributions from M...

Clueless consumers urgently need financial education

Four out of ten (42%) consumers have no idea what an annuity is, according to research commissioned by Sun Life Financial of Canada. When presented with a choice of descriptions of what an annuity is, of which only two were correct, a quarter of...

Buyout prices set to surge, says LCP

Buyout prices are likely to rise, as demand for pension scheme de-risking grows, and could outstrip supply, warns Lane Clark & Peacock (LCP). In its LCP Pension Buyouts 2010, Lane Clark & Peacock forecasts £15bn of new business...

Drive to outsourcing continues, says Hewitt survey

Pension scheme administrators are facing continued pressure to do more for less, according to the Hewitt pension administration survey 2010 of 97 UK scheme managers and trustees of both defined benefit and defined contribution schemes. The...

International news

The following is a roundup of recent news and developments in the pension arena from around the world, by Anne Bennett, Mercer.

Austria minimum interest rate requirement for some defined contribution schemes The Ministry of Finance has issued tax regulations requiring certain defined contribution plans to offer a guaranteed minimum benefit to be eligible for tax...

Association forum

The Pensions Advisory Service www.pensionsadvisoryservice.org.uk 020 7630 2250 New advisers We are pleased to welcome the following new adviser to TPAS: Sara Fisher. We still need new advisers particularly to help with casework which can...

Regulation roundup

Next on the DB agenda Our 2009 defined benefit (DB) campaign resulted in some positive reactions from the pensions market, so a year on we are now shining the spotlight again on the challenges facing DB trustees and sponsoring employers. In...

People

IN GOOD COMPANY - June 2010

Pensions World keeps you up to date with the latest news of hires and flyers

Star Moves ACA elects Southall as chairman The Association of Consulting Actuaries (ACA) has elected Stuart Southall FIA as its new chairman. Chairman and principal of the Punter Southall Group’s actuarial consultancy...

Statistics

Statistics - June 2010

STATISTICS TABLE

Surveys

COMMUNICATIONS The good old days

Communicating the pension scheme is not as straightforward as it once was, says Allison Plager

Remember the good old days when pension scheme communication entailed the annual benefit statement and pretty much nothing else? That was in the era of defined benefit (DB) schemes, offered by countless companies large and small. Employees joined...

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June 2010 issue

Analysis

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DC focus

Debrief

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