Posts Tagged ‘Actuarial’

Angela Burns

At the time of writing, on 29 March 2019 the UK will exit the European Union with or without a deal.

It is not possible to guess what will happen in the coming months and how markets will react. For Trustees with defined benefit pension schemes it’s an uncertain time.

The risks that Brexit poses are not new – they are the same risks that pension schemes face every day. Brexit just provides an increased chance of unlikely events.

So how should Trustees prepare?

In December 2015 the Pensions Regulator introduced guidance for Integrated Risk Management confirming that Trustees should consider risk at a holistic level. The three main areas of risk are ‘Funding’, ‘Covenant’ and ‘Investment’. Trustees should consider the main risks faced by the scheme across all three areas and more importantly how they interact. Trustees should also have in place contingency plans setting out actions that will be undertaken to limit the impact of risks should they materialise.

Brexit is effectively a ‘test’ of how well Trustees have implemented the Pensions Regulator’s proposals. A Trustee board with a robust IRM framework will be well placed to deal proactively with risks as they emerge.

It is important during times of volatility that Trustees have access to timely and accurate information to make quick, informed decisions. Trustees should ensure that their advisors are well placed to provide regular information in the lead up to, and after the 29 March 2019. Any delays in information provision will add to risk exposure.

Trustees should also have access to scenario analysis tools to determine the impact of certain events – for example a 1% p.a. fall in gilt yields. This will allow the Trustees to specify more robust and accurate actions when considering contingency plans.

Trustees with valuation dates on or around 29 March 2019 should consider the potential impact of this and may decide that the valuation date should be moved. In my view, there is sufficient flexibility in the funding regime to take a long term view on funding, and taking a snap shot of the funding position at a single point in time should not drive funding decisions.

In times of volatility, Trustees should monitor transfer value requests and any other member events where actuarial factors are used. If, for example, extremely low gilt yields result in high transfer values, the Trustees may choose to delay the provision of transfer values to see if the low gilt yield environment persists.

Trustees should also consider any employer exercises offering member options and when these options may be exercised.

Trustees may wish to disinvest funds in advance to allow for any ‘known’ payments on or around March to avoid disinvesting in inopportune conditions.

From an actuarial perspective planning is key, and a good IRM framework should result in quicker decision making.

Andrew Kerrin

“Time flies like an arrow – but fruit flies like a banana.” Just a personal favourite line (often attributed to Groucho Marx) that popped into my mind when sitting down to introduce Spence & Partners latest Quarterly Update. It seems like only last week that I was searching for words to introduce our first report of 2018!

Having taken aim at the topics that hit the headlines over the last quarter, marking with an arrow those of most interest, we have fired them into a neat summary for your consideration. We hope you enjoy reading this compilation, that it helps you pass the time, and who knows, might help you avoid a banana skin or two.

This quarter we have a wide variety of tasty morsels for you to digest, including a summary of the potentially far-reaching opinion from the Advocate General in Hampshire v PPF, a discussion of the main cyber security issues for trustees coming from the Regulator’s recent practice note, to a bite-sized rundown of the key legislative changes that hit the pensions industry back in April.

Enjoy your latest Quarterly Update – I hope you agree that our selection has hit the bullseye and our efforts have been fruitful!

To download this report click here or on the image above.

As always we love to get feedback from you. If you like what we do please tell us – it’s nice to get great feedback. If you would like things included, excluded or done differently please drop us a line too. The report is to help you, so help us tailor it to your needs.

And … if you find that you do have time to keep up with things, why not follow us on Twitter @SpencePartners and keep up to date as you go along.

Hugh Nolan

Once upon a time, there was a Scheme Actuary. He was very proud of his profession and his reputation as a prudent man of business. Trustees all across the land admired and respected him and queued up to follow his advice, for they all understood how clever and learned he was. Besides, the wise old King passed a law requiring them to appoint a Scheme Actuary so they had to have one anyway…

One day the actuary was counting out the gold coins in a pension scheme and a tiny fragment chipped off one and flew straight into his eye. From that day on, he could only see pensions through a gilt lens and his peripheral vision vanished altogether. However, nobody in the Kingdom knew about this incident, and everyone still trusted the Grand Vizier (surely “actuary”?) when he demanded a mountain of gold from every farmer, so he could look after all their cows should they go bankrupt… which many promptly did, since they didn’t all have a spare mountain of gold lying around.

Of course this is just a fairy tale and couldn’t happen in real life. Or could it?  In fact, a similar story happens every day in pensions – albeit not as extreme or (hopefully) amusing. Read more »

Alan Collins

Spence & Partners, the UK actuaries and consultants, today announced their appointment by The LS Starrett Company Limited Retirement Benefits Scheme for their award-winning, fully-integrated approach to DB scheme management – ‘The Spence Approach’. Services to the 475 member, £25 million Scheme will include actuarial, investment and pension scheme administration.

Alan Collins, Head of Trustee Advisory Services at Spence commented: “In a post-Brexit environment trustees are looking for greater scheme transparency and a more joined-up approach to funding, investment and governance. Our Mantle® system allows schemes to make informed decisions around their funding at any point in time, based upon the live administration and investment data – what we see they see. Trustees are no longer looking in the rearview mirror; instead they can be fully responsive to funding opportunities that will benefit the scheme. Ultimately, we are giving trustees and sponsors of all schemes levels of analysis and advice that is usually reserved for schemes with much larger budgets. We are very pleased to be working with LS Starrett and the Trustees.” Read more »

Richard Smith

FRS102 An Employers Guide

FRS 102 – a quick recap

You may think I am a bit late to the party to be releasing a guide for Financial Reporting Standard 102 (FRS102) and its effect on accounting for pension costs, given that the first edition of the new standard was released in March 2013, and subsequently updated in August 2014.

However, as FRS102 only came into play from 1 January 2015 and we are now approaching the end of the transition year in which companies are required to restate the prior year’s disclosure under this new standard, many companies will only now be thinking about this in earnest for the first time, and so I believe there is no better time to consider the similarities and differences with the previous standard, FRS17. Read more »

Marian Elliott

This blog was written for Pension Funds Online by Marian Elliott of Spence & Partners –

There is a lot to look forward to at this time of year. The end of March will bring longer daylight hours, the promise of slightly warmer temperatures and, for many trustee boards and companies, the process of carrying out an actuarial valuation of their pension scheme will begin.

If the very mention of this sends shivers down your spine then read on. Whilst there are no magic potions which can shrink your deficit or take the sting out of the valuation exercise, there are actions which you can take to improve the way in which the valuation process is managed and deliver better results for both the company and trustees: Read more »

Alan Collins

With recent market turmoil sending scheme funding levels tumbling, pensions present a potential Pandora’s Box for even the most enlightened Finance Director.

In this month’s issue of CA Magazine (pg. 56) Alan Collins, head of employer advisory services at pension actuaries Spence & Partners suggests 10 key questions that Finance Directors should be asking themselves about their defined benefit schemes and some guidance on each of these key issues.
Read more »

Brian Spence

Our pensions review of 2011

A New Year and in January developments in de-risking throughout 2010 were discussed. How would 2011 fare in comparison?

February hosted a long and sometimes confusing conversation about PIPs. Turns out it’s simple,……… honestly!

In a busy month of March we aired our opinions and gave a spring clean to these pieces:

Help for schools and colleges showed we are no fools in April with some guidance on FRS17 disclosures.

The joys of spring were not abound in May as we lost an “f” in pensions. There never was one?  I think you’ll ind……..

Inflation and its effects were being discussed in June as another quarter sees the inflation targets go by unachieved. On a more positive note the Actuarial Profession was inflated with a new influx of talented graduates from Queen’s University. We were there to welcome them to the industry and indeed are nurturing some of that talent within our business today.

Individuality was the theme of July’s hot topics. Section 75 Regulations fail to recognise the plight of the unattached charitable organisations among multi employer schemes. And, as tPR guidance on Incentive Exercises suggests trustees start with the view that they will not be in the members’ interests, we ask just how much trustees should assume all members have the same needs?

In August we tried to make sense of babysitting pensioners and whether they were truly responsible enough to take care of their own finances.

September brought another egg to the NEST in the form of NOW Pensions as a rival. All good sport or will it be rotten?

November saw us pushing the limits of data management. Are Trustees using all the tools at their disposal to  improve their data and meet tPR’s  deadline?

December and we are back to de-risking and not much festive cheer. We feature our article in the Actuarial Post.

David Davison

I was kindly introduced to the word scotoma last week. The dictionary definition is ‘a mental blind spot; inability to understand or perceive certain matters.’ I would have found it difficult to find a better word to describe the on-going debate, and I use that word very loosely in this case, in respect of public sector pensions culminating in the strikes on 30th November.

Things have been moving at such a speed it’s hard to keep up and to pick out the fact from the rhetoric. The week of the strike began with a bit of school yard name calling as trade union Unite issued their “Dossier of hypocrisy” exposing the extent of cabinet minister’s pension entitlements. All that did was make the case that those particular public sector pensions need to be reformed as much as, if not more than, all the rest. Read more »

Rebecca Lavender

On Monday 27th June Spence & Partners and it’s sister company independent trustee Dalriada Trustees had the pleasure of sponsoring an event held by Queen’s University Management School to celebrate the first graduates from the Actuarial Science and Risk Management degree programme.

Spence & Partner’s is now embarking on its third year of sponsoring placement students from the programme and has an objective of being viewed as the actuarial employer of choice in Northern Ireland. Read more »

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