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Industry news archive
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9th August 2012
Congratulations to TEAM GB
Aren't the Olympics great??
Surpassing all (of my) expectations, from the opening ceremony through glorious weather to the current medal haul.
Current Olympic news from the BBC
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21st June 2012
NAPF publishes further auto-enrolment guidance leaflets
The NAPF has published its third and fourth leaflets in the series entitled “New rules for pension saving made simple” which are designed to give employers the knowledge needed to implement auto-enrolment.
Leaflet number 3 – “What are my pension scheme options?” – outlines the considerations for employers when choosing a pension scheme which satisfies the auto-enrolment rules, and the range of schemes which can be adopted. It also explains the standards to be met where an employer wants to use an existing DB or DC scheme and the impact on contractual agreements.
The fourth leaflet in the series – “Will I need to change how I do things?” – focuses on how auto-enrolment may affect an employer’s internal processes and procedures, highlighting where changes may need to be made.
To view the range of leaflets on the NAPF website, click here.
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3rd April 2012
Fixed Protection deadline looms
There are now just three days left to apply for Fixed Protection. Given that the HMRC must have received a hard copy of your application by 5th April, ideally the last day for posting this is today.
A copy of the form can be downloaded by following this link.
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22nd March 2012
Just 2 weeks left to apply for Fixed Protection
There are now just two weeks remaining to apply for Fixed Protection. Remember also to allow for the post to arrive - HMRC must have received the completed application form - using FORM APSS227 - by 5th April in order for the Protection to be applied.
If you, or any of your employees need further information or advice as to whether to elect for Fixed Protection, get in touch with your usual Cartwright contact, or call Martin Ralph on 01483 860 201 (email martin.ralph@cartwrightrgroup.co.uk).
The HMRC guidance on Fixed Protection can be found by clicking here.
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9th March 2012
Chancellor may reduce Annual Allowance to reduce high earner tax relief
Despite only introducing the new reduced Annual Allowance of £50,000 in 2010, there is speculation that the Chancellor may reduce this to £40,000 in the Budget in two weeks' time, raising an estimated £600m per year in 'lost' tax relief. Liberal Democrat MPs are calling for the Annual Allowance to be reduced to £30,000.
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7th March 2012
Will high earners be hit with reduced tax breaks for pension saving?
It is widely speculated that the Budget, to be delivered by the Chancellor later this month, will remove the top level of tax relief for pension saving. Affecting people earning in excess of £150,000 per year, the removal of the 50% band for tax relief may be replaced by a so-called 'Mansion Tax', affecting properties worth over £2m.
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2nd March 2012
Bank of England admits quantitative easing bad for pensioners and pension schemes
The Bank of England has admitted that quantitative easing, the process whereby the Bank essentially creates more money which it then uses to buy assets such as government and corporate bonds from financial firms such as bank, insurance companies and pension funds, is bad for pensioners. Quantitative easing has the effect of increasing demand for bonds, depressing the yields, which in turn reduces the annuity rates which insurance companies offer to individuals when buying a pension income. However, the Bank of England comments that without a boost to the economy, many more people will be worse off.
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1st March 2012
Increase in GMP revaluation rates
The Government has just laid down Regulations, contained within SI 2012/542) confirming the rate of revaluation to be applied to guaranteed minimum pensions (GMPs) for periods of service ending on or after 6th April 2012. The rate applies to GMPs subject to fixed rate revaluation and is set at 4.75%.
This rate represents an increase, for the first time, to the rate in force prior to 5th April 2012 - 4%.
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29th Febuary 2012
Date set for Commons CPI/RPI debate
The e-petition calling for the Government to reintroduce the Retail Prices Index (RPI) for pension revaluation and indexation (see News entry dated 20th January 2012) is to be debated in the House of Commons tomorrow (1st March). This follows on the heels of the appeal case brought by various unions, which is currently being heard in Court.
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21st Febuary 2012
HMRC issues further guidance on Fixed Protection
HMRC has issued guidance on Fixed Protection on its website, explaining what it is, how it works, who is aimed at and how to apply. This guidance can be accessed by clicking on the link at the end this update.
With the deadline for electing for Fixed Protection only 6 weeks away, it is essential that individuals who may be affected or wish to benefit from this apply without delay. HMRC must receive the completed application (made using HMRC Form APSS227) by 5th April.
An individual who already holds Enhanced Protection, but who has a fund value below £1.8m and no cash lump sum protection would be entitled to a higher lump sum by switching to Fixed Protection. From 6th April, if no lump sum protection exists, the maximum lump sum available will drop from 25% of £1.8m (£450,000) to 25% of £1.5m (£375,000), a reduction of £75,000. But, their Lifetime Allowance would be limited to £1.8m. If you feel that you or any of your employees may be affected and would like advice on the options, please contact Martin Ralph on 01483 860 201 or by emailing Martin at martin.ralph@cartwrightgroup.co.uk.
The HMRC Fixed Protection guidance can be found by clicking here.
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20th Febuary 2012
Unions challenge the switch to CPI in the Courts
Today sees the Court appeal by various unions against the Government's decision to switch to the Consumer Prices Index (CPI) for pension revaluation and indexation purposes.
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13th Febuary 2012
Will the Government become an annuity provider?
In a letter to the Chancellor, Lord Myners has suggested proposals that would see the Government offering pension annuities to the public. Myners made the suggestion following reports that the annuity market is uncompetitive, particularly for individuals with 'smaller pension pots'. Martin Ralph, Head of Consultancy said 'any initiatives which help increase the options for pension scheme members at retirement can only be a good thing, particularly if these also have the effect of making annuity pricing more competitive.'
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10th Febuary 2012
Pensions Regulator publishes detailed guidance covering workplace pension reforms
Aimed at professional advisers and pension managers / HR specialists, the Pensions Regulator has published its detailed guidance covering the latest position regarding auto-enrolment and workplace pension reforms. This has been prepared as a result of recent legislative changes including the Pensions Act 2011 receiving Royal Assent. tPR has also updated some content as a result of feedback from employers and general review.
The guidance can be found by clicking on this link.
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9th Febuary 2012
Will retirement age be linked to life expectancy?
David Cameron is said to admire the Norwegian retirement system which has state retirement age linked to life expectancy. Speaking at a conference in Sweden, he suggested similar approach could be adopted in Britain. Under such a system, children born today would be unlikely to be able to retire until age 73 (based on current life expectancy projections).
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9th Febuary 2012
Auto-enrolment toolkit launched by DWP
The Department for Work and Pensions (DWP) has launched an 'auto-enrolment' toolkit on its website, aimed at guiding employers and their employees around the auto-enrolment and workplace pensions' minefield. Comprising a series of booklets and factsheets, the toolkit provides information and documents explaining the changes.
The auto-enrolment toolkit can be accessed by clicking this link.
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6th Febuary 2012
Indexation appeals to be heard on 20th February
The appeals against the Government's decision to use the Consumer Prices Index in place of the Retail Prices Index (see news dated 16th January 2012) is due to be heard on 20th February.
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6th Febuary 2012
HMRC launches online Annual Allowance calculator
HMRC has launched an online calculator for testing pension accrual and contributions against the Annual Allowance. The calculator allows details of the PIP to be entered and up to five years earnings, accrual and contribution information. It will calculate the value of the current year's accrual or contributions, and also indicate the total Annual Allowance available allowing for unused allowances from previous years.
The Annual Allowance legislation is complex and whilst it does not affect the majority of pension savers, it can be difficult for individuals' to fully understand their own position. The HMRC calculator appears to be a relatively simple estimator and thus, by definition, will not cater for the more complicated cases, but nevertheless, we welcome the move by HMRC to make this available. If you, or any of your pension scheme members may be affected by the Annual Allowance and would benefit from guidance as to what it means for them, please get in touch with your usual contact at Cartwrights, or call Martin Ralph on 01483 860 201 (email martin.ralph@cartwrightgroup.co.uk).
The HMRC calculator can be found by clicking this link.
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2nd Febuary 2012
Pension Revaluation Orders confirmed
The Occupational Pension Schemes Revaluation Order 2011 (SI 2011/2867) has been released (click here for a copy), this year without any prior consultation. The Orders are now based on the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). The increase in the CPI exceeded 5pc over the reference period, so this year's order has been capped at 5pc.
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1st Febuary 2012
Cartwrights launches enhanced corporate website and the CartwrightsLive client portal
With 2011 quickly becoming lost in the mists of time, and most New Years' resolutions already broken, we are keen to maintain momentum as we move into the second month of 2012. As part of our drive to deliver the highest quality of services to our clients, we have launched several changes to our corporate website.
Designed to enhance your use of the site, and to provide a hub of information, we have added functionality and developed our resources library. As well as this current and topical News Section, updated regularly, we have added a series of short presentations, covering issues which may be of interest to employers and trustees. These presentations will be reviewed and added to on a regular basis.
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1st Febuary 2012
Cartwrights launches the CartwrightsLive client portal
We are also extremely proud to announce the launch of our new secure client information and resource portal - CartwrightsLive. CartwrightsLive is a fully secure client and member accessible scheme information hub, where we can host all the important information relating to your pension and benefit arrangements. With different levels of access and functionality for employers, trustees and scheme members, it brings together your scheme information under one dedicated, central resource.
For further information and to request a demonstration login,
please contact Tony Thornton by clicking here.
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28th January 2012
DWP delays auto-enrolment
As expected, the DWP announced this afternoon that smaller businesses will be given more time to prepare and budget for the impact of auto-enrolment. Employers with less than 50 employees will now begin auto-enrolling their staff in May 2015, rather than August 2014 (or March 2014 for certain companies). Employers with between 50 and 3,000 employers will see delays of several months.
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25th January 2012
When is a SIPP not a SIPP?
In this brief blog, Martin Ralph considers whether self-invested personal pension arrangements are being used appropriately, and by the 'right people'.
For the last few years, self-invested personal pension arrangements (SIPPs) have been hailed as the panacea for those sophisticated pension savers who wanted to take full control of their investment portfolios. Allowing direct share trades, direct property investment and access to many types of otherwise restricted investment options, they provide a degree of investment flexibility and choice not found in a 'normal' personal pension.
But, as providers have developed group SIPP 'products' to allow for a single solution for their corporate clients, is access to a SIPP often too easy, and are they being used unnecessarily by many employees?
Within a modern group personal pension arrangement (GPP), it is possible to access anywhere between around 50 and 250 investment funds, depending on the solution. This is an adequate selection of funds for most investors. But, for those who want more, there is the option of using a 'fund supermarket', providing access to perhaps several thousand funds, or, ultimately a SIPP.
However, we are finding that individual members of these arrangements do not fully understand the choices available, and are going down the SIPP route, when in fact all they are really doing is investing across a handful of pooled investment funds, albeit perhaps ones not immediately available under their GPP. Most of the functionality of the SIPP is not required and is not used, yet much of the costs associated with it remain, and a fund supermarket or investment fund platform style approach may be a more appropriate, and less costly, solution. Using the SIPP also opens the door a little wider for individuals to invest inappropriately, if they do not have the expertise and are not advised.
But, SIPPs and group SIPPs do have their place. What this evidence suggests to us is a need for greater and clearer communication and engagement within the workplace, together, perhaps, with greater controls on access within group solutions.
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25th January 2012
DWP releases written statement confirming delays to auto-enrolment staging
Following the decision to delay the introduction of auto-enrolment for thousands of employers, the DWP has now released a written ministerial statement confirming the revised timetable. This includes a delay to the increase in the minimum pension contribution rates by 12 months, with the first increase now taking place on 1st October 2017.
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23rd January 2012
DWP opens consultation on GMP equalisation
The government has issued the long awaited consultation paper on GMP equalisation and also published a possible method for carrying out the equalisation. The consultation runs from 20 January 2012 to 12 April 2012.
Whilst this paper is at the consultation stage only, the Government is not arguing that GMPs should not be equalised. The consultation is all about the timing and methodology of the equalisation. Therefore we would expect it to become law later this year.
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23rd January 2012
EC confirms that UK occupational pension schemes will not be required to use unisex rates
In a Directive published on 22 December 2011, the EC confirmed that the 'Test-Achats' ruling of the European Court of Justice, which effectively banned gender-related annuity pricing, will not apply to occupational pension arrangements. This Ruling removes the need for trustees of defined benefit pension schemes to consider moving to unisex pricing of cash equivalent transfer values (CETVs) for their schemes.
Stephen Cartridge, Senior Actuary at Cartwrights, commented 'We are pleased that the EC has confirmed its position in relation to this issue. The concern for our clients was that this would be forced upon schemes from December 2012 when the ruling is due to come into effect.'
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20th January 2012
Government launches its advertising campaign to encourage saving for retirement
The Pensions Minister, Steve Webb, has suggested to the House of Commons that he may consider removing the restrictions under the National Employment Savings Trust (NEST) that ban transfers in and out, and limit contributions to £4,200 per year. He suggested that the market has moved on since these were introduced into legislation and that competition may force their removal.
Mr Webb also stated that the government will legislate if required to cap private pension charges, if these are felt to be a barrier to saving.
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20th January 2012
E-Petition against switch from RPI to CPI for inflationary increases reaches parliamentary threshold
An e-petition, set up to gather support against the 2010 decision to use the Consumer Prices Index (CPI) as a measure for pension increases has now received over 100,000 signatures, making it eligible for a debate to be heard in parliament. The increase in CPI is generally expected to be between 0.5% and 1% lower than the increase in the Retail Prices Index (RPI).
This comes hot on the heels of the appeal being launched by several unions (see News article dated 16th January).
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17th January 2012
New contracted-out employment guidance issued by HMRC
Revised versions of its contracted-out guidance booklets - CA14C and CA14E - have been issued by HMRC. CA14C provides guidance for salary related pension schemes whilst CA14E covers mixed benefit arrangements.
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17th January 2012
Is inflation-proofing on the way out?
In an interview with the Financial Times, the Pensions Minister, Steve Webb, suggested that he would not be adverse to the removal of inflationary indexation for private sector schemes as a statutory requirement. The comment was made as part of a discussion about finding ways to encourage employers to continue to provide defined benefit pension plans.
Previous suggestions and recommendations to scrap this requirement have been deemed to be a step too far, although recent legislation has reduced the cap on inflationary increases, helping to control costs in times of high inflation. The DWP has admitted that it is considering the proposals, but insisted that any changes would not apply retrospectively.
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16th January 2012
Appeal launched against the switch from RPI to CPI indexation and revaluation
Several trade unions have appealed the High Court ruling that the government can switch to the Consumer Prices Index (CPI) as a measure for uprating pensions. The switch was put into place as the government believes that the CPI is a better indicator of price inflation for pensioners than the Retail Prices Index (RPI). The fact that the increase in the CPI is expected to be as much as 1% a year lower than the increase in RPI will impact (negatively) the amount by which pensions are increased, but at the same time will also help to control future pension costs.
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11th January 2012
Continued record lows for gilt yields hamper member outcomes at retirement
The continued period of record low gilt yields is having its effect on the amount of pension that members of defined contribution schemes receive. Annuity rates, used by pension providers to convert a pension fund into an income, fell further during 2011, with a 65 year-old receiving perhaps 10% less in pension than if they had retired a year ago. Annuity rates have been on a downward trend for many years, forcing workers to re-evaluate their pension saving and in some cases, to delay retiring.
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10th January 2012
New research finds that people (still) do not understand pensions
New research has been published which suggests, unsurprisingly, that most people still do not understand pensions, and find the way in which they are described and the language used to be complicated and filled with jargon.
Unfortunately, the world of pension saving has grown surrounded by complex legislation and rules that are not always easy to follow, or explain. There are times when jargon simply has to be used.
However, it is extremely important that we, as an industry, do all that we can to minimise the complexity, to explain the issues in a straightforward and simple manner and to reduce the use of jargon. With the introduction of auto-enrolment and as the use of social networking and newsfeed sites to deliver information increases, so does the need to keep it simple. At Cartwrights we spend time and effort ensuring that we do this.
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9th January 2012
National Audit Office to review the regulation of DC schemes
The National Audit Office has announced that it is investigating how well member risks are identified and addressed under defined contribution pension arrangements. This will also look at how the responsibilities of the Pensions Regulator fit with those of the Financial Services Authority. The report is to be issued in the Spring.
We advocate the strong governance of DC arrangements and member outcomes, and will be interested to see the report's findings, and how this helps drive future governance.
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1st January 2012
Happy New Year
Cartwright Group Ltd wishes all of its clients and partners a very happy and prosperous New Year.
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22nd December 2011
Changes made to the Statutory Money Purchase Illustrations assumptions
The Board of Actuarial Standards has issued a new version (2.0) of its Technical Memorandum (TM1): Statutory Money Purchase Illustrations. The new version covers changes to the assumptions used.
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12th December 2011
PPF confirms levy estimate for 2012/13 to be £550m
The Pension Protection Fund has issued its final Levy Determination for the 2012/13 year, with a levy estimate of £550m. It has also outlined its new levy framework for the next three years. A copy of our Technical Update on this issue can be found in the Updates section.
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7th December 2011
HMRC publishes tax updates and draft Finance Bill 2012 clauses
Following on from the Autumn Budget Statement, HMRC has now issued draft Finance Bill 2012 clauses and tax updates. The key areas affecting pension provision cover changes to employer asset-backed pension contributions and consultation relating to overseas transfers (QROPS) and small pension fund commutation.
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5th December 2011
The Pensions Regulator invites dialogue regarding design and governance of DC pensions
The Pensions Regulator (tPR) has outlined six key principles which will form the basis of its future approach to the 'regulation' of defined contribution (DC) pension provision
The six principles span the lifecycle of a DC scheme from the design and set-up phases through to the ongoing management - including monitoring of scheme governance, accountability, scheme administration, and communications with members.
Martin Ralph, Head of Employee Benefits, said 'these principles build upon the guidance issued by tPR for DC trustees in October. Our ongoing governance and communication solutions form the cornerstone of our DC consulting services and we welcome further guidance designed to encourage strong DC governance for workplace pensions. It is essential that DC members understand their pension provision and that we see good retirement outcomes. Many current DC retirees find that their pension income falls woefully short of their expectations, which in many cases were set at outset and never reviewed.'
TPR has invited the pensions industry to comment on the high level principles and how these may actually be applied in practice.
Further information on tPR's guidance can be found here.
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5th December 2011
Are businesses prepared for pension changes?
Research by MetLife for their third Annual UK Finance Director Survey finds that over half of the Finance Directors surveyed are not aware of any of the current and proposed changes and amendments to workplace pensions. These include the introduction of auto-enrolment, the removal of the statutory retirement age, changes to pension indexation indices and IAS reporting requirements. Many are also not fully aware of the different ways in which risks within their defined benefit schemes can be managed.
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2nd December 2011
High Court rejects CPI challenge
The High Court has ruled that the government's switch from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) for pension increases is lawful. The TUC had brought a challenge against the government's use of the CPI but this has been rejected, at least for now. The TUC has been given the right to appeal. The decision clarifies the position for millions of public sector workers who will see their pension inflation proofing based on a measure which is now estimated to run at a long-term differential of perhaps 1.3pc - 1.5pc a year below RPI.
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29th November 2011
The Chancellor's Autumn Statement
The Chancellor's Autumn Statement didn't spring any surprises in terms of pension provision - most of the changes had already been leaked or predicted. The Chancellor announced a further increase in the State Pension Age from 66 to 67 by 2028. The decision to keep the 'triple lock' increase pledge in place for uprating the State Pension was welcomed, meaning that millions of pensioners will benefit from the full increase in the Consumer Prices Index of 5.2pc. The planned introduction of the National Infrastructure Plan, to be part funded by pension scheme investment, is largely considered to be good news by the pensions industry, although as with most things, the detail is yet to be announced.
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28th November 2011
HMRC amends Annual Allowance provisions
The HMRC has today announced amendments relaxing the 'carry forward' provisions for obtaining tax relief on pension contributions. Under HMRC rules, any unused pension contributions from the previous three tax years can be 'carried forward' and used in current tax to avoid an 'annual allowance' charge arising on contributions in excess of £50,000.
When the new Annual Allowance was announced in 2010, to take effect from 2011/12, the rules stated that any contributions in excess of the new Allowance that had already been made in the tax years 2008/09, 2009/10 and 2010/11, would offset the Annual Allowance that could potentially be carried forward. For example, an individual with pension saving in 2010/11 of £100,000 would effectively have used all of their carry forward Allowance for 2009/10, limiting the maximum amount that could be carried forward to 2011/12.
This restriction has now been removed, meaning that our example saver can now make use of their carry forward Allowance of £50,000 for 2009/10, in 2011/12, giving them an effective Annual Allowance of £100,000.
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28th November 2011
DWP to announce changes to auto-enrolment timeline
Amid considerable speculation in the national and industry press, the DWP has today stated that it will announce changes to the auto-enrolment timeline for certain sizes of employer. An announcement is expected during this afternoon.
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23rd November 2011
HMRC issues guide to Fixed Protection
The HMRC has issued a detailed guide to Fixed Protection and what must be done to apply for it before April 2012.
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11th November 2011
PPF concludes levy consultation
The Pension Protection Fund (PPF) has just concluded a consultation on the fine detail of its new approach to the calculation of PPF levies. Although expected to result in more stable levies, it is undoubtedly more complex than before.
We have issued a Technical Update looking at what is changing and the pitfalls to be aware of. A copy of the update is available in the Updates section of our website.
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10th November 2011
Government to consult on 'small pot' transfers
The Pensions Minister, Steve Webb, has announced plans for consultation into the possibility of automatic transfers for small pension pots for job changers. The consultation, to be undertaken by the Department for Work and Pensions (DWP) is to look at whether small pension pots can 'follow their owners' as they change employers, to reduce the number of 'lost' or orphaned DC pension funds.
There are an estimated 50,000 new small DC pension funds created each year - under auto-enrolment, this is expected to increase significantly. Many people lose track of their pension savings or find themselves unable to transfer or consolidate their arrangements as the fund values fall below providers' minimum requirements.
Whilst this appears to be a good idea in theory, we are not sure how the mechanics of it would actually work in reality and we await the consultation with interest.
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9th November 2011
Another NEST 'competitor' scheme is launched
Following the lead taken by the Danish Scheme, ATP, another new entrant to the world of 'NEST competitors' has been launched. 'The People's Pension' is a new trust-based defined contribution arrangement, introduced by B&CE to provide competition to NEST. Offering a flat annual management charge of 0.5% and no restrictions on transfers or contributions, B&CE believes that the scheme offers a credible alternative. We remain unconvinced that any competitors will steal a great march from NEST.
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8th November 2011
NAPF analyses impact of QEII
The NAPF has issued a paper to the Pensions Regulator detailing its analysis of the potential effect that quantitative easing may have on the funding of UK pension schemes.
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7th November 2011
Public Sector strikes over pensions looking increasingly likely
Widespread general striking within the Public Sector on 30th November, 2011 seems to be moving closer, as more union members are balloted. Unions are striking in response to the Government's plans to reform public sector pensions.
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3rd November 2011
Pensions Bill becomes Pensions Act 2011
Following a long and arduous journey through the two Houses, the Pensions Bill has finally received Royal Assent to become the Pensions Act 2011. We will be issuing a briefing document later this month looking at some of the key provisions of the Act.
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1st November 2011
NEST issues auto-enrolment guide for employers
The National Employment Savings Trust (NEST) has issued a guide for employees covering auto-enrolment. Entitled 'Employers' guide to automatic enrolment, How NEST can help you meet your duties', the guide is designed to help companies to prepare for auto-enrolment.
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31st October 2011
NEST 'competitor' launches in the UK
The first of several expected new entrants to the world of 'NEST competitors' has announced details of its alternative solution. Now Pensions, a multi-employer scheme established by the Danish Scheme ATP, has been launched in the UK as a rival to NEST. Offering just one investment strategy and an administration charge of £18 per year plus an annual fund management charge of 0.3%, the scheme will allow transfers in and out, and have no contribution restrictions.
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25th October 2011
The Pensions Regulator clarifies the role of a hybrid scheme trustee
Following hot on the heels of its statement to DC trustees, the Pensions Regulator has issued a statement aimed at trustees of hybrid arrangements.
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18th October 2011
Advice in the workplace welcomed by employees
Research undertaken by MetLife Assurance suggests that employees would welcome advice on pensions in the workplace, with 4 out of 5 respondents confirming that they would find this useful. This ties in with our own analysis of the level of understanding and engagement within a body of employees who receive strong communication and advice / guidance in relation to their workplace pension savings, and those that don't.
Our employee communication and advice solutions allow us to deliver a high level of information, guidance and, if required, investment fund advice, to employees in a clear, understandable and engaging way. By using award-winning technology, we can deliver this cost-effectively for our clients.
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17th October 2011
MPs feel the pinch as contributions rise?
MPs have today agreed to increase contributions to their pension arrangement by 3% of their salaries, and also to reduce future benefits. Whilst this is welcomed by us, the public, we understand that not all MPs are happy with the decision! It also does little to alleviate the difference between most public and private sectors employees in terms of pension provision.
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14th October 2011
Pension schemes jump to head of the debtor queue
The Court of Appeal has upheld an earlier ruling by the High Court in the Nortel / Lehmans case (December 2010) that the Pensions Regulator can have first claim over an insolvent company's assets on behalf of its pension scheme, ahead of other creditors.
This judgement could effectively mean that creditors other that the Pensions Regulator could be left with nothing in the event of insolvency.
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14th October 2011
Yet more pension taxation changes are on the way - are you ready?
As if 'pension simplification' in 2006 was not enough, further changes to the taxation of pension savings are being introduced from next year.
With changes to the Lifetime Allowance coming into effect from April next year and the potential need for individual's to apply for a new form of protection against this, known as Fixed Protection, we have issued a Technical Update explaining the changes.
A copy of the Update is in the Updates section of our website. HMRC has also issued a guide to Fixed Protection - a copy of this can be downloaded from their website.
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13th October 2011
The Pensions Regulator clarifies the role of a defined contribution scheme trustee
The Pensions Regulator has issued a statement clarifying the role of a trustee of a defined contribution pension arrangement. A copy can be found here. This statement seeks to identify the key differences in the governance requirements of a defined benefit scheme and a defined contribution scheme, to help trustees understand the key risks that they should be considering within a DC arrangement.
We strongly support this statement and have for many years been keen advocates of strong DC governance, whether trust or contract based. Martin Ralph, Head of Employee Benefits said, 'we welcome any call from the Regulator that encourages DC governance. We do not believe in simply establishing and implementing a DC solution, with advice ceasing at this stage. We remain a close partner and adviser to our clients, guiding their trustee board or their governance committee not just at outset, but throughout the life of the arrangement.'
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12th October 2011
NEST has over 100 'clients'
The NEST Corporation has announced that over 100 employers have to date signed up to use NEST as part of their future pension provision, ahead of the start of the auto-enrolment requirements from late 2012.
We believe that NEST has a large part to play in pension saving in the future, as employers seek a low-cost, low (corporate) risk pension solution. Martin Ralph, Head of Employee Benefits, commented 'a number of our clients have identified a transient workforce whose short-term membership of their main pension arrangements may not be appropriate. NEST can offer an alternative solution, to run alongside existing workplace pension provision.'
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12th October 2011
QEII spells bad news for pension schemes
We believe that the second round of quantitative easing by the Bank of England, where £75bn more money is to be pumped into the economy may spell very bad news for a lot of pension schemes and their sponsoring employers.
The purchase of long and very long dated gilts is likely to act to drive up prices and further depress yields, already at historic lows. As pension scheme liabilities are linked to gilt yields, this will have the effect of increasing liabilities, almost overnight. Many sponsors of these arrangements, already struggling in the global recession, will be further squeezed as trustees call for increased contributions.
Individual's relying on money purchase style pension provision will see their potential retirement income driven down yet further as pension annuity conversion rates are based largely on long dated gilt yields. A man retiring now will receive a pension perhaps 2/3rds lower than if he had retired 25 years ago with the same pension fund value
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11th October 2011
Employees' value defined benefit pension provision above job changes
A recent survey undertaken by Metlife in the UK suggested that almost 40% of members of an open final salary pension scheme are reluctant to change jobs for fear a move could damage their retirement savings. This demonstrates the importance that strong pension provision can have on retention of staff.
Closing a final salary to accrual is not the only option available to sponsoring employers struggling to meet the costs of ongoing defined benefit provision. We have worked with many companies helping them to find solutions that enable them to continue to operate and manage their defined benefit pension arrangements for their employees.
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10th October 2011
DC members still not engaged with their pension saving
There have been various headlines and news articles over the last week commenting on the lack of knowledge that employees have over their defined contribution pension provision.
Employee engagement in pensions and saving for the future has been a major headache for several years and we seem to be no closer to resolving the issue. Auto-enrolment is expected by many to fuel interest and therefore engagement in pensions, but is this really going to happen, or are employees simply going to fall into pension saving that they do not understand?
For corporate pension arrangements, particularly GPPs, the pensions industry shifted from 'full advice' to informed decision making (at best) during the Noughties, but we are now seeing an resurgence in some quarters for 'one to one' guidance and advice, at least around DC outcomes, expectations and investment strategy.
We are helping to drive this and offer all clients the opportunity to provide their employees with advice, both during the enrolment process and on an annual basis, using award-winning technology to maximise efficiencies.
But this is not enough to ensure full engagement. The industry as a whole needs to look forward and embrace new communication and engagement strategies, making greater use of online solutions, social media and networking, smartphone applications and QR codes.
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9th October 2011
Government report recommends delays to auto-enrolment
The Beecroft Report, commissioned by the government to look into aspects of business operations and the impact of the economic crisis within the UK, has recommended delays to the introduction auto-enrolment over concerns as to the impact on (particularly) smaller firms.
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25th Febuary 2011
New tax year, new tax rates
With the new tax year now only a few weeks away, it is important to ensure that you are ready for the changes to taxation, National Insurance and pension tax relief.
click here
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25th Febuary 2011
Inflationary errors could impact
The Bank of England has admitted an error by the Office of National Statistics (ONS) which has led to the two key inflation indices used by pension schemes to be understated.
click here
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25th Febuary 2011
The Pensions Bill continues through Parliament
The Pensions Bill 2011 has had its second reading in the House of Lords, with peers discussing its content in detail. The Bill includes the easements for auto-enrolment.
click here
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18th Febuary 2011
DWP announces reduction to contracted-out rebates
The DWP has announced that it intends to cut the level of the National Insurance Contribution rebate provided to employers and employees who operate and are members of contracted-out final salary pension arrangements.
click here
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1st December 2010
All change for pension tax allowances
Following the announcement by the Government that it is changing the levels of the Annual and Lifetime Allowances for pension tax relief purposes, Martin Ralph looks at which this means for employers and employees.
click here
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