Media Releases

Alan Collins

Spence & Partners, the UK actuaries and consultants, today announced their appointment by the Chartered Management Institute Retirement Benefits Scheme for their award-winning, fully-integrated approach to DB scheme management – ‘The Spence Approach’.  Services to the 250 member, £30 million Scheme will include actuarial, investment and pension scheme administration.

Alan Collins, Head of Trustee Advisory Services at Spence commented: “Recent years have presented many difficulties to the operation of defined benefit pension schemes and 2016 showed that as much as ever.  It is therefore crucial that trustees and advisors step up to that challenge and pro-actively tackle the issues they face and work collaboratively with sponsoring employers to improve scheme funding levels.  I have great confidence that the services we offer will assist all parties in achieving their goals.

This is an exciting and strategic appointment for Spence, as it demonstrates our growing strength in the south of England and also shows our continued strength in providing services to the not-for-profit sector.

We are very pleased to be working with the Trustees going forward.”

Martin Kellaway, Chair of Trustees for the Chartered Management Institute Retirements Benefits Scheme commented: “During the appointment process Spence were able to demonstrate very clearly how they will work with us to manage risk effectively and integrate the liability and asset side of the scheme, to develop and implement clear long term strategic objectives.  The Spence approach is fresh and innovative, and we look forward to working with Alan and his team.”

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 »

David Davison

Spence & Partners, the UK pensions actuaries and administration specialists, was awarded the Pension Consultant of the Year title for their ‘Spence Approach’* for defined benefit (DB) pension schemes at the 2016 Workplace Savings and Benefits Awards ceremony at London’s Royal Garden Hotel last night.

Spence were recognised amongst their peers for their work, most notably their innovative approach to Defined Benefit (DB) scheme management and the role they have played in helping schemes complete DB to DC pension transfer requests.

David Davison, Director at Spence & Partners, commented: “Having won the same award category at the Workplace Saving and Benefits awards last year, we are so proud and excited to have won again in 2016!

Workplace Saving and Benefits Awards 2016

Davison added: “Further advancements this year to our offering provides schemes with even greater integrated risk management and more confidence when making investment decisions. Ultimately schemes, no matter their size, can access a level of analysis and advice that is usually reserved for only the largest of schemes.  This gives trustees and sponsors the confidence to manage their schemes to a long term strategy whilst providing accurate benefits and information to member, which is of course their primary objective. We have further developments planned for this year which we believe will take the approach even further”.

Neil Buchanan

Our latest report details market movements over the 3 month period to 30 June 2016, and how this impacts the key financial assumptions required for determining pension liabilities under FRS102 or IAS19.

Major asset classes have had a relatively strong performance over the 3 month period to 30 June 2016. This strong performance follows on from the similar growth experienced in the Q1 of 2016. However, these asset classes have had their value distorted somewhat by ‘Brexit’ in the final week of the quarter. Furthermore, it is likely that any investment gains will be more than offset by increases in schemes’ liabilities (as a result of lower bond yields due to investors’ “flight to quality”), 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.

Finally, we also review the recent Brexit vote and how this will likely impact upcoming FRS 102 or IAS19 valuations.

Download your report now
Simon Cohen

Spence & Partners, the UK actuaries and consultants, today urged schemes to review any strategy that contains allocation to Diversified Growth Funds (DGFs).

Simon Cohen, Head of Investment at Spence & Partners, commented: “DGFs are a pretty common part of an allocation strategy for smaller schemes, as they allow them exposure to lots of different asset classes they wouldn’t ordinarily get access to due to issues of scale. However, schemes should be careful when investing in them – yes, they are less volatile and have somewhat protected schemes against the fall in equity markets at various points in time, but schemes need equity. DGFs aren’t a direct equity replacement and shouldn’t be treated as such – and, of late, their performance has been particularly disappointing too. Read more »

Hugh Nolan

Spence and Partners welcomes the Annual funding statement issued by The Pensions Regulator.  Of the three key outcomes, Spence is broadly supportive of the TPR’s position on two, but disagrees with the view on mortality projections.

Hugh Nolan, Director at Spence, commented: “The Regulator has quite rightly highlighted a concern that many schemes fail to submit their scheme valuation by the statutory deadline, despite having 15 months after the effective date to do so.  Modern technology gives trustees the opportunity to get their first results from the Scheme Actuary far faster than is usually the case, as well as modelling alternative assumptions quickly and cheaply.  If the actuarial figures are available promptly, trustees and employers can start their negotiations sooner and avoid unnecessary time pressure leading to extra costs and rushed decisions.  As we’ve seen in the last few days with BHS, schemes that fail to submit their valuation on time leave themselves open to criticism, irrespective of any mitigating factors.

Nolan went on to say: “The Regulator’s detailed and helpful analysis recognises that schemes are facing even more challenging deficits than expected.  Many deficits will be higher now than at the last valuation, even though employers have been pumping money in.  Fortunately corporate profits seem to be rising generally so many employers will be able to increase contributions where needed.  Sadly though, not all scheme sponsors are enjoying the same increase in their profit level and it is the trustees of those schemes that will particularly need the right advice to get the right outcome.

“The one area where our view differs from the Regulator is the use of the latest mortality projections.  The Regulator’s statement seems somewhat reluctant in acknowledging that it is reasonable for trustees to update to CMI2015.  Obviously the key requirement for trustees is to fund prudently and we can understand the Regulator being slightly nervous about this reduction in liability values.  However, reckless conservatism can be dangerous.  It seems only fair that we should take account of the latest information available when it suggests we might be over-reserving, since we would certainly do so if the evidence pointed the other way.”

Hugh Nolan

Spence & Partners, the UK actuaries and consultants, today urged trustees to take more
proactive steps in order to avoid the kind of market volatility that caused BHS and TATA to struggle*.

Simon Cohen, Head of Investment Consulting at Spence, commented: “Volatile markets present both opportunities and threats for pension schemes. In order for them to present an opportunity, schemes must monitor their funding level more actively in order to be able to take prompt action to lock-in investment gains and reduce future volatility. Schemes should assess their risks and take control of a strategy to achieve the ultimate goal of paying all benefits to members in full without bankrupting the employer in the process.” Read more »

Alan Collins

Spence & Partners, the UK actuaries and consultants, today announced their appointment by Simons Group Limited Pensions & Life Assurance Scheme for their award-winning, fully-integrated approach to DB scheme management – ‘The Spence Approach’.  Services to the 450 member, £25 million Scheme will include actuarial, investment and pension scheme administration.

Alan Collins, Head of Trustee Advisory Services at Spence commented: “The Pensions Regulator’s Integrated Risk Management (IRM) guidance encourages trustees to make joined-up decisions around funding, investment and governance. Most schemes face three key issues when trying to do this – systems, data and monitoring.  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.  Read more »

Susan McFarlane

Spence Director Hugh Nolan has been named as the incoming president of the Society of Pension Professionals (SPP). The SPP is the representative body for the wide range of providers of advice and services to work-based pension schemes and to their sponsors.  Hugh has been elected into the role and will take it up from 1 June 2016.

Hugh joined Spence & Partners in April 2016. having held a variety of senior roles in several major pension consultancies since 1989.  He was Chief Actuary at one of our large competitors until 2016 and is currently the President-Elect of the SPP.  Hugh has also sat on the Main Committee of the Association of Consulting Actuaries (ACA) and chairs the ACA’s Defined Contribution Committee.  He is a regular commentator in the press on pension issues.

Hugh’s presidency of the SPP will focus on practical measures to help policy makers shape the future of retirement savings.

Scott Cameron

Spence & Partners, the UK actuaries and consultants, today announced it has achieved the Quality Assurance Scheme (QAS) accreditation from the Institute and Faculty of Actuaries (IFoA).

Scott Cameron, Actuarial Function Head at Spence & Partners, commented: “At Spence we have a culture of continual improvement and saw this assessment as an opportunity to step back and challenge our processes and procedures against a clear set of outcomes. Quality assurance is a central part of our ethos and the principles of QAS fit very well with our overall strategy. We wanted to be at the forefront of this new initiative and it is an honour to be amongst the first tranche of organisations to receive this independent recognition that demonstrates the procedures we have in place deliver quality outcomes for our clients. It is a great recognition for all the firms who have achieved accreditation.”

QAS is a voluntary accreditation scheme for organisations that employ one or more members of the IFoA.  In order to obtain QAS status, an organisation must demonstrate their commitment to assurance of the quality of actuarial work and comply with the standard APS QA1*. The suitability for accreditation is then assessed by an independent team and subcommittee.

*Taken from IFoA website https://www.actuaries.org.uk/upholding-standards/quality-assurance-scheme-qas

Richard Smith

Spence & Partners latest blog for Pension Funds Online

Following the Chancellor’s recent announcement on the creation of the new Lifetime ISA the industry found itself asking whether the UK is just one generation away from the death of pensions.

The introduction of the Lifetime ISA (LISA) provides an attractive new savings opportunity but only for the under 40s – yes, the Government is allowed to be age discriminatory even if businesses aren’t.

However, at what cost?

Will the younger generation, faced with a choice between a flexible ISA-style product with a government-funded bonus and locking their savings away in a vehicle they don’t understand, leave pension saving to “more mature” workers?

The under 40s now have a complex decision to make when deciding where to save their hard earned money. They will have to balance a number of competing factors, and there is a clear need for guidance to help them navigate through the maze.

LISAs will provide savers with substantial flexibility, and for basic rate taxpayers the tax benefits are likely to be better than a pension (a bonus equivalent to basic rate tax relief on the way in, and tax-free on the way out).

It is true that the LISA annual allowance is just one tenth of that in a pension, but that is likely to be an issue only for a few.

For higher rate taxpayers LISA’s tax benefits are less generous than pensions, but the additional flexibility on offer might still attract contributions away from pensions and into LISAs.

Countering this is the issue of employer contributions.

How much “free cash” would an employee sacrifice by choosing a personal LISA over an employer-funded pension, and is this worth the additional flexibility?

For some people, the attraction of not locking their money away will outweigh the financial benefits of doing so, for many this will be the primary driver in making their decision to choose LISAs over pensions.

Younger workers now have a choice to make between pensions, LISAs, ISAs, help-to-buy ISAs and normal savings.

Each of these have different rules, but only one has the benefit of employer contributions.

It seems odd that, just as the Government is pushing through auto-enrolment legislation, it introduces a new product that will discourage millions of people from saving into a pension.

The issues are complex. From a purely financial perspective, for some the “right answer” will be LISAs, whereas others will be better off investing in pensions.

Some people will carefully consider all the issues and reach a conclusion one way or the other, however, many people will end up making the wrong decision if all the facts and clear, easily-accessible guidance is not made available.

The need for effective guidance and advice has never been so strong – the question now is whether we are all up for the challenge?

Richard Smith

Spence & Partners asks whether the UK is just one generation away from the death of pensions, thanks to the Chancellor’s announcement on the creation of the new Lifetime ISA.

Richard Smith, Head of Corporate Advisory Services, Spence said: “On the face of it, in yesterday’s Budget the Chancellor made very few changes to pensions taxation. Setting aside for now the increased bill for employers in public sector pension schemes, there was little “new news” to affect existing pension schemes.

“The introduction of the Lifetime ISA provides an attractive new savings opportunity but only for the under 40s – yes the Government is allowed to be age discriminatory even if businesses aren’t. However, at what cost? Will the younger generation, faced with a choice between a flexible ISA-style product with a government-funded bonus and locking their savings away in a vehicle they don’t understand, leave pension saving to the “more mature” workers? Are we now just one generation away from the death of pensions?

“Yesterday’s announcement has introduced yet more complexity to the savings decisions facing younger workers. They now have a choice to make between pensions, LISAs, ISAs, help-to-buy ISAs and normal savings. Each of these have different rules, but only one has the benefit of employer contributions. It seems odd that, just as the Government is pushing through auto-enrolment legislation, it introduces a new product that will discourage millions of people from saving into a pension.

“The need for effective guidance and advice has never been so strong – the question now is whether we are all up for the challenge?”

Brian Spence

Spence & Partners welcomes the creation of a Lifetime ISA but said it was unfortunate that the current pensions tax system was still in place.

Brian Spence, at Spence and Partners said: “What’s not to love about the Lifetime ISA compared to the complex pension tax system? The snag is the government bonus stops at 50 and if you are over 40 before April 2017 – tough luck!

“Young people however get a Government bonus of £1,000 for each £4,000 and you can take it out whenever you want if you need it but lose the government bonus until age 60. For young workers it is a “no-brainer” – max out your Lifetime ISA before you even think about pensions saving with its complexity, tie-ins, charges and near certainty of political interference.

“It is a pity the Chancellor did not take the bolder step of killing the current pensions tax system once and for all – but he may well have landed a significant blow!

“The Lifetime ISA is clearly the shape of things to come.”

Brian Spence

Spence & Partners today announced the appointment of Hugh Nolan, previously JLT’s Chief Actuary, as director. Hugh will be based in Spence’s London office and begins work with the business on 1 April.

Brian Spence, Founder, commented: “Hugh comes with a great deal of experience at a senior actuarial level, so he will take a leading role in our group and his presence in the London region will consolidate and further enhance our position in this competitive market. We very much look forward to him joining us in April and welcome him wholeheartedly on board.”

Hugh added: “I am very pleased to be taking a leading role in driving forward Spence’s business. Spence has carved out an enviable reputation for high standards and innovation and are a great choice of adviser for all sizes of employer and pension scheme.”

Hugh entered the pensions industry in 1989 and has worked for several large consulting firms, most recently JLT / HSBC, where he has been since 2002. He sits on Council of the Society of Pension Professionals (SPP) and is Chair of the DC committee of the Association of Consulting Actuaries (ACA).

Brian Spence

Spence & Partners today announced the appointment of Simon Cohen as Head of Investment, based in our London office.

Brian Spence, Founder, commented: “We are extremely proud of our investment consultancy capability, which we believe is unique in the market. Pension scheme trustees and charities are coming under increasing scrutiny and indeed increasing pressure to maximise returns while managing risk. In the pensions arena, our cutting edge pensions technology, Mantle, monitors the value of assets and liabilities every day empowering trustees to make real time decisions or use automated switching and take advantage of investment opportunities as they arise.

“Simon has experience of a wide range of investment work including strategy setting, manager selection and liability hedging, which will add further weight to our proposition. He will work closely with corporate, charity sector and pension clients on all aspects of investment strategy. We are very pleased to welcome him on board.”

Simon added: “I’ve watched Spence grow in size and stature over the years and I look forward to helping drive the development of the practice in the future, harnessing the existing skills and expertise within our business to add even more value to existing clients and attract new ones.”

Simon entered the pensions industry in 1994 and became a Fellow of the Institute and Faculty of Actuaries in 2000. He has worked for three major consultancies holding senior roles in both investment consulting and management positions.

Richard Smith

Spence & Partners today said that no matter whether the UK votes to stay in or leave the EU in the upcoming EU Referendum, there will be many implications for pensions.

Richard Smith, Head of Employer Services said: “The EU Referendum represents a once in a generation chance for the UK to shape its relationship with the EU and also the direction of future legislation with wide ranging impacts on all of our lives. Pensions are not immune from this – the upcoming EU referendum could significantly affect investment markets and pension schemes both in the UK and in Europe.

“The impact will be felt regardless of the outcome – pre-vote uncertainty in itself over the result will inevitably cause a lot of volatility in the markets. In the event of an exit vote, the aftermath would likely continue in the short to medium term as the markets adjust and the country gets to grip with the impact of having to renegotiate freedoms of movement and trade. While we may not see any immediate changes to pensions, it would certainly give more freedom for the UK to make changes in the future.”

Spence predicts that the four key aspects of pensions that will be impacted are:

  • Scheme Funding – With an impending referendum, economists expect gilt yields to become more volatile due to concerns over the stability of the EU economy. In the event of an exit vote, returns on UK equities would lag behind their EU & Global peers. In addition, the value of sterling could fall leading to increased short term inflation. This would be good or bad news for a scheme depending on where it was invested. Uncertainty may also provide opportunities that pension schemes can take advantage of through careful monitoring of their investments and effective governance.
  • Money Purchase Schemes – Members of money purchase schemes may find that the value of their pot is volatile as the EU Referendum approaches. Those approaching retirement will also be exposed to the risk of volatile gilt prices if they wish to purchase an annuity on retirement. However, if gilt yields increase as they are expected to in the event of a Brexit, then such members may subsequently be able to purchase more income with their pension pots. This is an area where it will be key for DC members to take advice. Instability in annuity rates caused by volatile gilt yields may provide a further boost to drawdown products until markets settle down.
  • Sponsor Covenant – Trustees of Schemes whose sponsors are heavily exposed to the EU either through exports, or through subsidies will need to take a lot of care around the time of the referendum and also following an exit vote. Even the threat of ‘Brexit’ may cause EU businesses to look to find suppliers within the EU to reduce their risk of a UK exit. The effect of this is likely to be offset slightly by the predicted fall in the value of Sterling should the UK leave the EU. If this were to happen, it would make UK exports cheaper for EU countries and with the right agreements in place may help to improve trade. Conversely, net importers from the EU may see a relatively more expensive Euro eat into their profits.
  • Cross Border Schemes – One of the more obvious areas where an exit from the EU would have an impact is on cross border schemes between the UK and the EU. Currently under EU legislation there are very stringent requirements that cross border schemes must be fully funded at all times. A vote to leave the EU could make the UK an attractive place for any multinational with sites in the EU and the UK to base their pension scheme.

Richard Smith added: “In recent years, we have seen constant change in the pensions landscape, and with the upcoming EU referendum the only thing we can be sure of is that these changes are set to continue regardless of whether we vote to leave or remain in the EU.”

Angela Burns

Financial Reporting Standard 102 (FRS 102) has now replaced FRS 17 as the main financial reporting standard in the UK and Ireland.  It is important that you understand the changes, how they affect you and the options available to you to manage any impact accordingly.  Spence has put together a handy summary to help you do that – just click the option that applies to you and get in touch if you would like any further assistance.

I already disclose my defined benefit pension obligations under FRS 17

I have never disclosed my defined benefit pension obligations before

David Bogle

Spence & Partners, the UK pension actuaries and administration specialists, today shared its concerns that with figures from the ONS* showing newborn female babies are expected to live to 93, and male babies to at least 90, if pension savers don’t fully understand longevity risk (that they will outlive the funds in their pension pot) when planning their savings, they may be facing a long and financially difficult retirement.

David Bogle, Mortality Expert, Spence & Partners said: “People need to start understanding how their retirement prospects will be impacted by uncertainty around their own life expectancy. Research published last week by the Office of National Statistics (ONS) projected that in 50 years’ time newborns in the UK will be expected to live past 97 – life expectancy has vastly increased since previous generations, and this underlines the importance of fully understanding our own longevity risk and ensuring we are putting enough money aside. Unfortunately we just don’t expect to live as long as we will, and it is crucial that this is factored in to everyone’s retirement planning.” Read more »

Alan Collins

PRESS RELEASE

Spence & Partners, the UK pension actuaries, investment and administration specialists, today welcomes the publication of The Pension Regulator’s (TPR) Integrated Risk Management Guide, and urges trustees to review scheme management in line with the new principles.

The guidance from TPR sets out practical help on what a proportionate and integrated approach to risk management might look like and how trustees could go about putting one in place. Spence already adheres to the guidance with its ‘Spence Approach’. Read more »

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