With 31 December being the most common date for corporates to have their year-end, Finance Directors will soon be turning their minds to their annual accounts. After a number of years of falling yields and growing deficits, they might be hoping for a Christmas present of an easing of the pensions problem, particularly if they have read recent headlines around improving pension scheme funding levels
Whilst there is still some time before the year-end, and (as the US election has recently reminded us) anything can happen, we will aim to give sponsoring employers advance warning (unfortunately this wording is chosen deliberately) of what they can expect come the year-end. Read more »
The last week brought much hyperbole to the description of financial markets (using the BBC website as my barometer):
Early in the morning of 9th November (UK time), Donald Trump gave his victory speech as his election victory became certain.
9th November, 8.01 – “FTSE Sinks” – the FTSE 100 has plunged. Wow, what has happened? “Plunged” by 2% – that’s not really a plunge is it?
9th November 17.01 – “FTSE 100 Closes Higher” – the FTSE actually closes 1% higher on the day.
So, in other words, like lots of other days. Read more »
As charities in LGPS in England await the results of the 2016 actuarial valuations they could be doing so with some trepidation given the changes in market conditions since the last valuation round in 2013. Read more »
Well, the wait is finally over. Horton v Henry has been decided. After hearing arguments in April and deliberating over this important decision for 6 months, the Court of Appeal released their much anticipated judgment on 7th October 2016. Unfortunately for me, this came a week after my summary of the case history was published in PMI News with a “wait and see” conclusion on the Horton decision. The Lord Justices clearly forgot to give me a heads-up… so rude!
Anyway, as mentioned in my article and earlier blog this decision has been a long time coming. A controversial and potentially devastating judgment for bankrupts (Raithatha in 2012) has been put to bed, meaning bankrupts can now breathe a sigh of relief that their entire pension pots post Pension Freedoms are not at risk of an Income Payment Order. Read more »
One thing you can be sure of is that there is no shortage of pension updates hitting your inbox on an almost daily basis – updates we don’t always get round to reading. Here at Spence we like to be helpful so to save you time, the team have scoured the news and developments which have impacted the pensions world in the last quarter and produced an update of the most topical, newsworthy and essential matters that you need to see to keep you updated and informed.
This quarters highlights include
- 5 investment questions to ask post Brexit.
- We are still in Europe so how does this affect risk assessment frameworks?
- Gilt yields have been detrimentally effected by Brexit but what does this mean for transfer values and funding?
- We explain HMRC’s latest announcement on VAT and pension schemes.
- What’s been happening with the Pensions Ombudsman and in the Court?
- Governance has been tightened up for DC Schemes. We explain how.
Read more »
Our latest report details market movements over the 3 month period to 30 September 2016, and how this impacts the key financial assumptions required for determining pension liabilities under FRS102 or IAS19.
Major asset classes have had a strong performance over the 3 month period to 30 September 2016. This strong performance follows on from the similar growth experienced in the previous quarters. However, it is likely that any investment gains will have been more than offset by increases in schemes’ liabilities resulting in lower funding levels. To help draw attention to the practical implications, the effect of these market conditions have been illustrated on a typical pension scheme.
So apparently we’re all living longer than ever before and the Government’s solution to keep State pensions affordable is to make everyone retire later. That’s all well and good if your job is easy and you can keep doing it until you’re 67 or 70 (so MPs and Scheme Actuaries will be fine, thankyou very much) but it’s not so practical in many occupations where the physical demands are much higher. In fact, recent research reveals that 12% of people within five years of State Pension Age are too ill or disabled to work. According to the TUC’s report “Postponing the pension: are we all working longer?”, only half of people aged 60 to 64 are economically active. The half that aren’t earning does include the lucky folk who have been able to choose to take early retirement but it also includes those who have been made redundant or are unable to find a job, as well as those too sick, so it’s a safe bet to say that far more than one in eight people in this age range are unable to work. Read more »
The result of the EU referendum on 23 June 2016 was a surprise for many of us. It was difficult to predict the detrimental impact on gilt yields which occurred in the weeks following the result! With many UK pension schemes invested in gilts, the historically low gilt yields which resulted has led to pension schemes being faced with significantly higher liabilities. Transfer values for deferred members of DB schemes have also increased. A transfer value is a best estimate of the cost of providing the benefits to the member in the scheme and these too are calculated with reference to gilt yields.
Trustees may be concerned if their scheme experiences an increase in transfer value requests post Brexit. Trustees are ultimately responsible for the security of benefits of ALL members- those who wish to transfer and those who remain in the scheme. Read more »
An issue often over-looked by employers participating in a Local Government Pension Schemes is that each admitted body is required to have a Discretions Policy in place. This Policy must be published, kept under regular review, and a copy must be sent to the administering authority. Read more »
The past few weeks have seen many interesting changes in investment markets as they attempt to find a new level following Brexit. Pension Schemes should take this into account when reviewing their funding and investment strategies. In some cases it may be worthwhile to expedite your investment review, although as pointed out by my colleagues, this will only be in exceptional circumstances as pension scheme investments will be based over a very long horizon.
We will look at some of the major changes that have happened to markets since the EU referendum, consider how these will impact Defined Benefit (“DB”) schemes and provide ideas to help manage risks caused by the resulting market volatility over the coming months. Read more »