Archive for August 2013

Alan Collins

Spence & Partners latest blog for Pension Funds Online –

31st March and 5th April are common dates for pension scheme valuations. The popularity of 5th April dates back to 1997, when trustees and employers were able to squeeze in one last valuation before the Pensions Act 1995 took effect for valuations from 6th April 1997 onwards.

There is, however, a problem with valuation dates of 31st March and 5th April in 2013. And, for a change, it is a good problem! Current market conditions have improved scheme funding levels to such an extent that the results from earlier valuation dates are effectively redundant. Read more »

Kevin Burge

This week, F&C investments published their 2013 Independent Trustee Survey.  Over 100 Independent Trustees gave their views on a number of issues that effect pension schemes in the 21st century.

One of the key questions posed was “what is the biggest challenge facing lay Trustees”? Just over a third cited insufficient knowledge; a third cited increased regulatory demands while a further third just said they had insufficient time to fulfil their role as a Trustee.

Perhaps as a result of these views there has been an increase in professional Trustees being appointed, a fact that does not probably surprise anyone within the industry. Nearly half of the respondents said that the rise in regulatory demands have led to this increase. Again a fact that is not surprising if you take a moment to reflect on the changes that have been made in the past 5 years and the constant overhauls that have been made to pensions by successive governments. Read more »

Will Davison

Spence & Partners, the UK pensions actuaries and administration specialists, today advised that more schemes should be auditing their data controls to avoid data protection fines and suggested a number of steps that schemes should consider to ensure better information security:

  • A strict data policy needs to be implemented and maintained;
  • The easiest things can be overlooked and it is important to take a common sense approach. Data should not just be discarded in bins. Make sure there are confidential waste bins and that a specialist firm is employed to dispose of the waste;
  • Carry out spot checks on staff to ensure compliance with policies in place;
  • Consider having independent audits in accordance with recognised accreditations e.g. ISO 27001 or AAF;
  • Data security is not a tick box exercise – more probing questions should be asked; and
  • Train staff and make sure that they understand how important data security is and the procedures that need to be followed. Read more »
Will Davison

Spence & Partners, the UK pensions actuaries and administration specialists, have said that yesterday’s forward guidance issued by the Bank of England could have different impacts for UK defined benefit pension schemes across their liabilities and assets.

Marian Elliott, Head of Trustee Advisory Services, commented: “With the Bank’s intention to keep the base rate at 0.5% until an unemployment target has been reached, they will maintain the upward pressure on liability values of many UK DB schemes. Maintaining QE for the short to medium term may well stem the recent rise in gilt yields, which had been good news for schemes as this lowered the current value placed on pension liabilities. Until the unemployment conditions are met and interest rates begin to rise again, we would not expect pension liabilities to reduce significantly on the back of rising gilt yields. Read more »

Marian Elliott

Spence & Partners latest blog for Pension Funds Online –

In 2000, the result of an experiment designed to examine consumers’ reaction to choice was published in the Journal of Personality and Social Psychology. The experiment was conducted in a Californian grocery store, where researchers set up a sampling table with a display of jams. On the first weekend, they set out 24 different jams for people to taste; and on the next, they set out just six.

The results were staggering. Whilst more shoppers stopped at the display when there were 24 jams, only 3% of those who stopped went on to buy a pot. When there were six jams on display fewer shoppers stopped, but 30% of those who tried a jam made a purchase. Similar results have been found in other experiments since.

It seems that too much choice can be demotivating and the same effect can be seen in the investment industry. Read more »

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