Spence & Partners Head of Charity & Not for Profit advisory services David Davison was set the challenging task of presenting a session entitled “Pensions Made Simple” at the 22nd annual Charity Accountants Conference held in Birmingham on the 19-20 September 2013. The talk covered defined benefit and defined contribution schemes, private and public sector schemes and provided the audience with an overview of the issues charities face and the potential solutions available to them. The talk was well received by the audience and slides are available here : The Charity Accountants’ Conference – Pensions Made Simple
Spence & Partners, the UK pensions actuaries and administration specialists, today advised that more schemes should be auditing their data controls to avoid data protection fines and suggested a number of steps that schemes should consider to ensure better information security:
- A strict data policy needs to be implemented and maintained;
- The easiest things can be overlooked and it is important to take a common sense approach. Data should not just be discarded in bins. Make sure there are confidential waste bins and that a specialist firm is employed to dispose of the waste;
- Carry out spot checks on staff to ensure compliance with policies in place;
- Consider having independent audits in accordance with recognised accreditations e.g. ISO 27001 or AAF;
- Data security is not a tick box exercise – more probing questions should be asked; and
- Train staff and make sure that they understand how important data security is and the procedures that need to be followed. Read more »
Spence & Partners, the UK pensions actuaries and administration specialists, have said that yesterday’s forward guidance issued by the Bank of England could have different impacts for UK defined benefit pension schemes across their liabilities and assets.
Marian Elliott, Head of Trustee Advisory Services, commented: “With the Bank’s intention to keep the base rate at 0.5% until an unemployment target has been reached, they will maintain the upward pressure on liability values of many UK DB schemes. Maintaining QE for the short to medium term may well stem the recent rise in gilt yields, which had been good news for schemes as this lowered the current value placed on pension liabilities. Until the unemployment conditions are met and interest rates begin to rise again, we would not expect pension liabilities to reduce significantly on the back of rising gilt yields. Read more »
Spence & Partners, the UK pensions actuaries and administration specialists, today commented that the recent news surrounding the availability of real-time valuations is a welcome step towards the delivery of a more pro-active service to pension scheme trustees and sponsoring employers, but that progress will be hindered if the link with scheme data and an audited benefit specification isn’t strengthened.
Marian Elliott, Head of Trustee Advisory Services at Spence, commented: “The facility to undertake daily valuations and become more responsive around the scheme’s funding position will certainly benefit trustees and sponsors in the management of legacy defined benefit schemes. It is absolutely right that trustees should expect to receive real time liability information. This is something we have been doing with our clients for a few months now and they have responded very positively to the streamlining of the process. We are therefore pleased to see the development of other such services being announced in the industry. Read more »
David Davison contributes to an article outlining the issues affecting public sector defined benefit pension schemes. Read more.
UK pensions actuaries and administration specialists Spence & Partners today said that a greater part of the communication around Auto Enrolment should be to emphasise the need to contribute more than the minimum requirement. This will go some way to help avoid understating the true contributions required for members to achieve their desired retirement fund.
Commenting, Marian Elliott, Director at Spence said: “Auto Enrolment is starting to look like the ‘five-a-day’ fruit and vegetable campaign. The government set the nutrition figure at five-a-day as it was felt that it was too much to ask for people to engage with the real required amount, which is around nine-a-day. Whilst this campaign has inevitably helped the overall situation on healthy eating, it is now so embedded as a figure that people do not seek to find out the amount they should truly be eating for a healthy lifestyle. So too with contributions. If the industry place too much emphasis on the minimum figures as good retirement provision, then members are less likely to consider contributing further to actually reach their pension goal. Read more »
David Davison answers questions regarding pensions provision in the event of an Independent Scotland. Click here to watch the interview.
UK pensions actuaries and administration specialists Spence & Partners today said that many data problems suffered by schemes are down to advisers withholding information and issues from trustees in fear of it jeopardising their appointment.
Mark Johnson, Head of Data Audit & Analysis at Spence, commented: “As part of the procurement process many schemes will be offered free data cleanses and audits under the transition of scheme information between advisers. However, in lots of cases this gets parked to one side while the bigger transition takes place and never ultimately gets completed. The result of this is that a number of legacy data issues are transferred across to the new adviser and remain unresolved. The new adviser is often then reluctant to raise any data issues further down the line, as it would highlight the work they had not undertaken as agreed. This is happening a great deal in the industry and affected trustees are unaware.”
Johnson continued: “As we all know, the Regulator has included good record keeping and data as part of its guidance for trustees. But if the trustees are being kept in the dark they may think they are in a stronger position than they actually are and could be unwittingly failing in their governance duties. To avoid this, trustees should be challenging their advisors far more and not be put off by paying for data cleanses. Although data cleansing exercises can have a sizeable cost implication for schemes, trustees will actually reap the rewards as they will gain efficiencies in other areas. Over the long term having more accurate data will not only save problems further down the line, but also a substantial amount of money.”
Public sector and state pensions represent one of the most significant challenges for Scottish independence. David Davison examines some of the issues in an article on the Public Service website
Article available at:
Belfast-based actuarial and administration firm, Spence & Partners Limited, has appointed Cyril Gaffney in the role of Administration Consultant. This newly created role comes on the back of UK-wide expansion for the firm which also has offices in London and Glasgow. It marks a reunion between Spence founders, Brian Spence and Neil Copeland, and Gaffney who previously worked together as colleagues in the 1990s.
Gaffney, a graduate of Queen’s University and University of Ulster, is an experienced pensions administration professional who has worked with a number of consulting firms, including Mercer and PricewaterhouseCoopers, in a career spanning 18 years before taking on his current role at Spence.
His main focus will be on developing Spence’s innovative administration service which utilises innovative technologies to deliver cost efficient actuarial and administration to pension schemes in the UK and Ireland.
Gaffney is an Associate member of the Pensions Management Institute and the Institute of Chartered Secretaries and Administrators.
Spence & Partners CEO, Brian Spence said: “I originally recruited Cyril in 1994 in the pre-Spence & Partners days when I was at Mercer. I was sorry at the time when he left Mercer to move to a new role in another firm but now delighted to be reunited with him at Spence.
“He’s a consummate professional who understands the UK pension industry and is definitely someone who can make a huge contribution to our team.
“His appointment comes in the wake of significant growth across the business which has expanded across the UK. We welcome Cyril to the team and I look forward to working with him as we continue to build the firm.”
The article is available here: http://www.civilsociety.co.uk/finance/blogs/user/David-Davison/content/14192/seven_lessons_from_the_collapse_of_people_can
The article can be found here:
The article is available here: http://www.civilsociety.co.uk/finance/blogs/user/David-Davison/content/14149/caught_in_steves_webb
UK pensions actuaries and administration specialists, Spence and Partners, has opened an office in London and announced the appointment of new director Marian Elliott as the head of its UK Trustee Advisory Service.
Elliott is a scheme actuary who has worked in the UK pensions market for 10 years since she moved to England from her native South Africa. She has experience in advising both corporate and trustee clients in the private and public sectors.
Based at the firm’s London premises in Berkeley Street, Elliott takes on a national role to further develop Spence’s trustee advisory practice. She also joins the firm’s board, where she will assist with strategic direction and business development.
She said: “Spence has a fantastic team and I am thrilled to be joining them at this exciting stage of their development. Their recent successes in the trustee advisory market, together with their investment in IT, data management systems and software innovation, highlight their absolute commitment to providing high quality advice to trustees.”
Spence and Partners CEO, Brian Spence said: “Marian is an experienced and extremely competent operator within the pensions industry and we are very excited about her joining our team. Getting her on board and launching our new London office marks another great step forward for Spence. Marian’s drive and her exceptional track record will undoubtedly bolster our offering as a firm.”
These new developments follow Spence’s recent appointment as one of eight firms on the PPF’s Specialist Administration Services Panel which was confirmed earlier this month.
Spence & Partners Limited, has been appointed by the Pension Protection Fund (PPF) to its new administration services panel.
Through the appointment, Spence will provide specialist pension administration services to the trustees of schemes which are in the assessment process for both the PPF and the Financial Assistance Scheme (FAS). Along with the other seven panel members, the firm’s remit is to ‘significantly contribute to the effort to increase the number of schemes that transfer to the PPF within a given period, whilst delivering an excellent customer experience’. Read more »
Leading pensions actuaries and administrators Spence & Partners have completed ISO/EIC 27001, an internationally recognised standard for Information Security Management.
ISO/IEC 27001 is fast becoming the international touchstone for effective, secure information management practices that protect organisations and ensure their compliance with data protection, privacy and computer misuse regulations. The application and use of this standard primarily ensures business continuity, minimising business damage by preventing and reducing the impact of security incidents while maximising business investments and opportunities.
The security practices adopted within Spence & Partners to comply with the accreditation are essential to protect the interests of the firms’ people and its clients in ensuring the secure and safe deployment of IT systems and services.
Brian Spence, Managing Director at Spence & Partners said: “We are proud to be one of the first pension administration companies to meet ISO 27001 compliance criteria standards.
“IT security is becoming increasingly paramount – given the volume and importance of the data which firms such as ours hold on file and we felt it was essential to obtain this accreditation. We believe the assurance we can offer clients through this high standard of data security will give us a clear advantage against many of our counterparts within the UK pensions industry.”
“This underlines our commitment to setting the standards across our sector and to provide our clients with enhanced levels of service and security. This commitment spans all levels of Spence & Partners and Dalriada, whether we act as trustees, advisers or are only considering our internal information and processes.”
To help undertake the compliance project in a very tight timescale, Spence & Partners brought in external consultants Cimaomega.
Gillian Esquivel, Director at Cimaomega said: “This project has been completed at an accelerated pace and is a credit to everyone working directly and indirectly on it. This underlines Spence & Partners’ commitment to invest for the benefit of their clients.”
For further information please contact Bill Shaw on 07974 720669 or firstname.lastname@example.org
The writing hand of Mervyn King must be feeling the strain of the inflationary pressures in the UK’s economy. For six quarters in a row, the Bank of England Governor has found himself in the position of having to draft a letter to Chancellor George Osbourne to explain why the Government inflation target has been missed. It may be unfair to blame Mr King as many think that the Chancellor’s target is unrealistically low, including Mr Osbourne himself who seems to accept high inflation as a reality we have to live with for the time being.
High inflation is not always bad – it can encourage economy-boosting spending and more private investment in companies as many investors see stocks and shares as a better option than cash. Unfortunately, it also provides a lot of instability in the economy and the world of pensions. Over the last year, inflation has been the biggest issue on our radar, not least because of the contentious legislation to determine pension valuations based on Consumer Price Index (CPI) rather than the previous gauge of Retail Price Index (RPI) being introduced in the UK.
The recent announcement that CPI rose by 4.5 per cent over the last year compared with an increase in RPI of 5.2 per cent will have a direct economic impact on many pensioners. Those with pensions linked to RPI would gain by almost one per cent each year compared to those with pensions linked to CPI. Assuming these inflationary rises continued at their present rates, the income of a pensioner currently earning £10,000 each year would rise to just over £16,600 per annum in ten years time under RPI compared with around £15,500 per annum under CPI.
Inflation as it impacts on pensioners is generally accepted to be currently relatively higher as the ‘basket of goods’ includes many items which have increased more rapidly recently, such as food and fuel costs. These tend to represent a greater proportion of income spend for a pensioner whereas other areas of expenditure which have been more stable or reduced.
The current high levels of inflation are highlighting the controversy over the move from RPI to CPI. We have already seen many public sector union leaders calling for a judicial review on this decision and the private sector is not exempt from this either. British Airways have seen three trustees of the pension fund in April resign because of the move from RPI to CPI.
Future movements in CPI are very difficult to predict. Even over recent years, there have been a number of occasions that CPI has exceeded RPI so it can therefore not be ruled out that CPI could on occasion give rise to higher increases than are currently paid under RPI. The basket of goods for CPI could also change – if, for example, housing costs are included, this could substantially close the current gap between it and RPI.
Looking at the impact of inflation from a different perspective, it can also have a roller-coaster effect on pension scheme payments and funding levels. Inflation caps on pension increases are often overlooked. Pensions may become significantly devalued if this cap applies for an extended period (irrespective of whether the inflation measure is CPI or RPI). Pension increases are generally capped at a maximum of 5% per annum, and so with inflation at its current level, capping at the 5% level would currently apply under RPI and remain a distinct possibility for the future.
While it would be bad news for pensioners and possibly the wider economy, a run of higher inflation is actually likely to improve scheme funding. Providing the actual inflation level exceeds any cap that a scheme has in place, it will be providing its members below inflation increases which, assuming investment returns do keep pace with inflation, will improve the overall funding of the scheme. The worst possible scenario for scheme funding is likely to be in a period of deflation whereby they would need to effectively pay out increases in excess of inflation and reduce scheme funding.
Perhaps the fine balancing act and the cause and effect implications of rising inflation explain the apparent willingness of the Bank of England and the Government to live with this situation, at least in the short term. However, the longer Mervyn King is required to pen an inflation letter to the Chancellor, the greater impact this will have on UK pensioners.
This article featured in the Scotsman on 24th June 2011.
As a result of Government proposals to change the way public sector pensions increase, thousands of divorcing couples may be unable to finalise the financial aspects of their divorce according to a leading pensions consultant.
Government plans mean many pension schemes in both the private and public sector will not be in a position to implement pension sharing orders or even to issue transfer value statements.
“This is a very disappointing state of affairs” said Ian Conlon, Pensions and Divorce expert at Spence & Partners, Consulting Actuaries. “Peoples’ lives move on and they should be able to sort out their affairs and I am afraid this is an unintended consequence of government pension policy.”
The proposals announced by the Chancellor of the Exchequer, George Osborne, in the June 2010 budget state the Government’s intention to link future increases in public sector pensions to changes in the Consumer Prices Index (CPI) instead of increasing in line with the annual change in the Retail Prices Index (RPI).
Over a period of time it is expected that CPI will be lower than RPI and all public sector Cash Equivalent Transfer Values (CETVs) will reduce to take account of this, a reduction that could be around 20% or more in some cases.
As a result, it is understood that most if not all, public sector schemes have already stopped quoting CETVs and it is likely that this delay will continue until further guidance is published. This, in turn, will mean pension sharing orders issued will not be implemented until the position is clearer, and for those in the midst of divorce proceedings, whose calculations are put on hold, it could mean a considerable increase in costs.
Ian Conlon added: “Divorce proceedings are expensive and stressful enough without a log-jam of cases building up while pensions administrators, lawyers and actuaries debate the legal issues and amend software to deal with the changes.”
“Whilst a degree of uncertainty may remain, it may well be attractive for some parties to proceed having been provided with an estimate of the impact of the change.
“Here at Spence & Partners we have developed specific software which can help divorcing parties and their legal advisers with an estimate of the likely impact of the change and the potential change in value of a pension share which was in the process of being agreed which we believe we will be helpful in many cases”.
Spence & Partners are a firm of Actuaries, Consultants and Pensions Administrators with offices in Glasgow, London and Belfast and experience of operating pension schemes in England & Wales, Scotland, Northern Ireland and Ireland.
In the June 2010 budget the Chancellor of the Exchequer announced the Government’s intention for future increases to public sector pensions to be linked to changes in the Consumer Prices Index (CPI). To date, such pensions were increased in line with the annual change in the Retail Prices Index (RPI).
The Pensions Minister subsequently issued a statement on 8 July confirming that the Government also intends to use CPI for determining statutory minimum pension increases which apply to private sector pension schemes.
Over longer periods of time it is expected that CPI will be lower than RPI. All public sector Cash Equivalent Transfer Values (CETVs) will reduce to take account of this; the position with private sector pension schemes is more complicated and the impact will depend upon the specific scheme rules. In the case of a member of a public sector pension scheme, the reduction in their CETV could be as much as 20% or more.
As this is such a material change, we understand that most, if not all public sector schemes have stopped quoting CETVs and it is likely that they will defer the implementation of pension shares on divorce until revised factors are in place. This will delay divorce proceedings and may increase costs for those in the process whose calculations are put on hold.
Spence & Partners Ltd have developed specific software which can provide divorcing parties and their legal advisers with an estimate of the likely impact of the change in the level of increases on the CETV, and the potential impact on the value of the pension share on divorce which was in the process of being agreed. Whilst a degree of uncertainty may remain, it may well be attractive for some parties to proceed having been provided with an estimate of the impact of the change.