Posts Tagged ‘Regulation’

Hugh Nolan

Politics and Pensions

The world is a very uncertain place at the moment and strangely that might mean a period of relative stability for UK pension regulations. The main reason for optimism about such stability is simply that Parliament will have to focus so heavily on Brexit issues that there will be no time for another Pensions Act any time soon. The second reason is that there doesn’t seem to be any real appetite for any major change, despite the loud shouting from various parties on many, many sides. Read more »

Gillian Lister

21st Century Trustees

The Pensions Regulator’s 21st Century Trustee initiative inspired a previous blog by one of my Dalriada colleagues recently “Trustees in the 21st Century” and is now the subject of a discussion paper.  What should a modern trustee look like and is regulation required?

Let’s face it, being a pension scheme trustee was never an easy job but it just seems that it is becoming more and more demanding.  The demands being met by trustees require them to have a complex knowledge in the minefield that is now pensions and they are coming under increased scrutiny. This means that effective trustees need a high degree of knowledge and understanding. Trustees need to be knowledgeable of the whole pensions landscape, understanding such things as scheme funding, investment decisions, employer covenant and above all else the best interests of their membership in relation to that pension scheme. The wisdom of Solomon and patience of Job would seem apt for a trustee job description. Read more »

Chris Roberts

From previous blogs, I have made it clear that Auto-Enrolment was in urgent need of a firm hand.  With the abject failure to strongly police Stakeholder, I have watched the regulatory position with interest.

The recent high profile case of Swindon Town FC (the Robins) has brought this sharply into focus.  Whilst not every case merits (or gets) this level of attention, there have been 6,746 separate cases of regulator intervention in auto-enrolment cases to 31st December 2015.  These range from over 1,000 fixed penalty notices being served (at £400 each), to 21 inspections of premises taking place (the tanks very much on the lawn).  With 100,000 employers enrolling each month, these numbers are going to increase significantly as we work through the micro-employer enrolment process. Read more »

Chris Roberts

It is pretty much impossible to log onto my Twitter account at the moment without seeing a blog or commentary regarding master trust saturation and the need for more regulation.  Whilst immediately wishing to blame others for the deluge on my twitter feed, these articles resonate with me and are providing useful industry insight.

When reflecting on this point I looked back on a previous blog and noted some wise market commentators did foresee this:

http://www.spenceandpartners.co.uk/archives/should-nest-say-tata-to-atp-for-now/

(Obviously, I only hark back to the blogs where I was correct and not those that fall wide of the mark, but that is my artistic license!)

It is now widely reported that there are between 70 and 100 master trusts operating within the UK. Read more »

John Griffin

Now that the Financial Services Authority (FSA) is no more, it is likely that it will mainly be remembered for one thing: presiding over the near-meltdown of the UK’s banking system.  It didn’t rein in the banks, and arguably even encouraged the explosion in the City in the mid 2000s, with its feather-light touch approach to regulation.  To be fair, though, none of the so-called regulators around the world came out of the crisis (if, indeed, we are out of it) smelling of roses. Read more »

Neil Copeland

1988 and all that

1988. Lawrie Sanchez scored the winner as the Wimbledon Crazy Gang beat the then League Champions Liverpool in the FA Cup final, Phil Collins topped the charts with A Groovy Kind of Love and teenage boys everywhere were confused by their adolescent hormones generating an unhealthy interest in a cartoon Rabbit called Jessica. It was indeed the best of times and it was indeed the worst of times.

The Tories were in power, then as now, and believed in individual freedom and individual choice. You could choose to buy your council house, choose to get on your bike and, thanks to a reform introduced that year, choose not to join your employers pension scheme and instead take out a bright new shiny personal pension. 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

As charities face continuing issues with their defined benefit pension provision I’d viewed the consultation on the Section 75 regulations with some degree of optimism in the hope that there might at last be a recognition that unconnected organisations participating in multi-employer schemes might at last be viewed as a special case. Indeed pensions minister Steve Webb responded to some of my comments in a recent Pensions Week article by referring to the consultation.

Unfortunately the focus of the consultation is very much on connected organisations and centred around the impact of corporate activity and misses the specific issues faced by third sector employers entirely.  Schemes are being forced to operate with one hand tied behind their backs and participants offered less flexibility than would be the case if they had their own scheme leading them to make decisions which are undoubtedly against their long terms financial interests.

Our full response to the consultation can be found here and it is to be hoped that the scope of the consultation can be widened and this inconsistency dealt with.

Neil Copeland

Apparently the Baiji (Yangtze River Dolphin) is amongst the rarest mammals in the world. It may even be extinct. Clearly there’s a fine line between being very, very rare (i.e. only one left) or being extinct (none left). The last definitive sighting was in 2004. It was declared functionally extinct in 2006 but video footage of what might have been a Baiji was taken in 2007 raising the possibility that there was at least one survivor out there, wisely staying well clear of humans.

When it comes to pensions legislation common sense is nearly as uncommon, but we appear to have a confirmed sighting in the DWP’s response to the consultation on the abolition of contracting out on a defined contribution basis.

Now I have never understood why one of Margaret Thatcher’s most lauded sound bites was “You turn if you want to. The lady’s not for turning!” Not turning in the face of irrefutable danger or logic is not a particularly common sense position to adopt. Indeed history and experience teach us that a U turn is not necessarily a wrong turn.

If only the Titanic had been able to perform a timely U turn. Or Thelma. Or Louise.

So clearly I welcome the Government’s common sense U turn on the abolition of transfers from contracted out pension schemes. I had blogged previously about the iniquities of the original provision, sneakily hidden in the regulations regarding the abolition of DC Contracting-out, which could have outlawed such transfers. Respondents to the DWP’s consultation on these Regulations presented a factual and rational analysis as to why, for some people, based on their particular circumstances, transferring out of a contracted out defined benefit scheme is clearly in their interests. A lesson that the Pensions Regulator could usefully learn.  More importantly the DWP appears to accept that the decision about whether or not to transfer should be made by the member, having taken impartial advice, rather than be imposed in some crass one size fits all, we know what’s best for you, diktat from the nanny state.

As I previously noted the draft regulations did rather smack of an admission that the FSA was failing in its duty to regulate this particular area of advice. Rather than address that shortcoming they have tried to foist the responsibility for regulation of transfers onto pension scheme trustees through the Pension Regulator’s “guidance” framework. Some commentators had responded to this development by suggesting that it was wrong and possibly illegal for trustees to fully embrace the Pensions Regulator’s guidance on enhanced transfer value exercises. Given this, abolition may have seemed like an easy option, despite its inherent unfairness.

Yes members need protection from unscrupulous advisers but that is why we have the FSA and, from 2013, the Consumer Protection and Markets Authority. It is certainly not why we have pension scheme trustees, who have a difficult enough job to do without being forced to do the regulators’ jobs for them.

We have consistently argued that properly structured and funded enhanced transfer value exercises are a legitimate approach for employers to engage with their scheme members with a view to managing their liabilities. They also provide members with an opportunity to properly review their retirement planning with a professional adviser.

So credit where credit’s due, well done to the DWP for changing its mind on this one. It will be interesting to see if the Pension Regulator’s finalised guidance on enhanced transfer exercises will also be leavened with common sense.

Now if the DWP could only be persuaded to approach the question of GMPs in the same manner as it has recently dealt with Protected Rights – that is, just make them disappear – then that would be further evidence that, after years of languishing in neglect, common sense is unexpectedly back in vogue at Westminster.

Alan Collins

Open market option for all?

I read with interest the guidance to individuals with money purchase benefits published on 2 November by the Pensions Regulator (tPR) and echo comments from Pensions Minister Steve Webb that “choices we make at retirement are amongst the most important of our lives” and “shopping around can provide better value for money and significantly boost retirement income”, and those from tPR’s acting Chief Executive Bill Galvin who has stated that “members could miss out on a higher retirement income because they are not well-supported in making good choices”.

The engagement of the Pensions Regulator in the education process within occupational defined contribution schemes is welcome, and emphasis has rightly been given to the potential benefits to members of obtaining independent financial advice. In particular, the guidance should act as a reminder to Trustees of schemes which provide both defined benefits and money purchase benefits that the members with money purchase benefits deserve due care and attention.

However, the guidance appears to be in stark contrast to the regulatory approach and pending legislation governing defined benefit arrangements, particularly those containing contracted-out rights. The “presumption of guilt” surrounding transferring benefits out of a defined benefit arrangement, and the potential end to the ability to transfer contracted out rights from defined benefit to money purchase arrangements in 2012, would seem to be at odds with the ethos of encouraging members to make choices which best suit their own circumstances.

For example, the value contained in some defined benefits (such as a prescribed level of pension increases or spouse’s pensions where the member is single or where the spouse already has a substantial pension), could be used to provide alternative benefits which are more suited to the needs of the individual concerned. Also the value of a money purchase pension pot can be retained on the death of the member, whereas this event may cause the value of a defined benefit to be significantly eroded .

I would therefore ask that members of defined benefit arrangements continue to be afforded the same opportunities to exercise their “Open Market Option” in the future.

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