Spence & Partners latest blog for Pension Funds Online –
There are many terms used in the industry to describe the process whereby trustees and scheme sponsors agree a funding target and plot the path between where they are now and the attainment of that funding level – some call it flight paths, others journey plans or route maps.
Unless you spent the Christmas break in a remote location with no access to the pensions press, you will have also heard that the Regulator has issued a consultation document regarding its revised code of practice for funding defined benefit (DB) schemes.
The approach the Regulator sets out in this document is one which, arguably, trustees should already be taking – i.e. obtaining a real understanding of the sponsor’s covenant, the risks it is exposed to and its growth plans, and then using that information to determine a reasonable pace of funding towards an appropriate target. Any such plan should respond and adapt as economic conditions change, or as the circumstances of the sponsoring employer are altered. Read more »
Last week, the Financial Conduct Authority (FCA) splashed onto the business pages extolling the virtues of choice for consumers in the pension annuity market. Their review has found that 80% of consumers purchasing annuity from their existing providers could have got a better deal by shopping around in the open market. I welcome the FCA’s continued efforts in this area and trust that, in time, it will lead to a better deal for consumers.
This drive to encourage consumers to shop around with their defined contribution pot should be mirrored in defined benefit (DB) arrangements. Read more »
All organisations participating in multi-employer defined benefit pension schemes need to carefully consider how the introduction of the new Financial Reporting Standard 102 will impact upon their organisation and carefully assess what options are open to them. The new accounting requirements will see many organisations who do not currently record their defined benefit pension liabilities having to do so for the first time. This could have a very material impact on balance sheets.
Organisations who already account for their scheme as a defined benefit scheme need to consider if the new legislation provides them with alternatives to their existing disclosures.
Alan Collins, Director and Head of the Employer Advisory practice at Spence, has compiled a Guide which analyses who the changes will affect, what the changes will mean and what steps to take in preparation for them. The Accounting disclosures under multi-employer pension schemes Guide is available to download here.
In the early part of 2013, the DWP consulted on proposals to consolidate and simplify the existing Disclosure Regulations which will come into force on 6 April 2014.
The Disclosure Regulations specify information that must be provided by pension schemes, to whom it must be provided, and ultimately ensuring members and others are given a consistent level of information. This also extends to schemes having the certainty of knowing what information they should provide and when to provide this.
The Disclosure regulations have been in force since 1987, and have been amended regularly since inception. There are indeed separate regulations for occupational schemes, personal pension schemes and stakeholder schemes. The intention is that the new regulations will replace and consolidate the existing regulations that apply to occupational and personal pension schemes. For stakeholder schemes, these will remain within the stakeholder schemes regulations, but will be amended to be the same as that of occupational and personal pension schemes. Read more »
Alan Collins, head of employer advisory comments on an article outlining the complex compliance challenge Scottish SMEs face.