At first I thought that it was one of those mix ups you hear about in travel agents. You know the couple who thought they were going to Barcelona, Spain only to end up in Barcelona, Venezuela – how we laughed.

So when BBC Northern Ireland  reported that the New York Stock Exchange was establishing an office in Belfast my initial thought was that the Americans had accidentally left off their usual helpful Hollywood identifier.

You know what I mean. You’re watching Tom Cruise abseiling down the Eiffel tower, motorbiking under the Arc de Triomphe and dodging traffic on the Champs Elysee, when up comes a little subtitle – “Paris, France”. Just in case you thought it was Paris, Wisconsin, population 194. And 3 cats.

But for once, I thought, Belfast, Maine, might have been helpful. Indeed there is even a Belfast in upstate New York so I could see where the confusion might arise.

But when I clicked on the website there were a couple of characters looking extremely like Northern Ireland’s  First Minister Peter Robinson, and Deputy First Minister Martin McGuinness peering back at me. You knew it was good news because Peter was giving us his best Gordon Brown style smile and he didn’t have his hands round Marty’s throat!

So it’s true the NYSE is establishing a bridgehead in Belfast. So I guess what the rest of Europe wants to know is “Why Belfast?” Read more »

Pirelli is the latest UK employer to close its final salary pension scheme to existing members.

I thought it would be helpful to set out FIVE ESSENTIAL steps employers must take before consulting employees on the closure of a final salary pension scheme. Read more »

Independent Trustee Dalriada Trustees Limited, sister company to Spence & Partners, are pleased to announce that from 1st October Claire McGruer will join Brian Spence and Connie Johnstone on the Board of Directors of Dalriada Trustees Limited.

Claire joined Dalriada Trustees in 2007 and acts as a trustee to a number of schemes who benefit from her wide ranging experience providing technical support and advice to both corporate and trustee clients.

Brian Spence commented that “Connie and I are delighted that Claire will be joining us and we are confident that this is a positive development that will strengthen our business in terms of both shaping the strategic direction and our decision making processes as a trustee.”

For further information please contact David Davison at consulting actuaries Spence & Partners on 0141 331 1004.

Issued on behalf of Spence & Partners by Karen Milne at Blueprint Media tel 0141 353 1515
Date:   January 2010

Baldrick has clearly taken up employment with the NAPF. They have come up with a plan (see FT.com – Pension schemes to face ‘quality mark’ test) which is as cunning as a fox who’s just been appointed Professor of Cunning at Oxford University but has moved on and is now working for the U.N. at the High Commission of International Cunning Planning. As good old Balders himself might have said.

And the cunning plan is? A quality mark plus for pensions!!

So the message to is:-

• Employer paying 10% – Good!
• Employer paying 6% – Okay!
• Employer paying less than 6% – not worth bothering with!

It’s a good job they’re bringing in auto enrolment for personal accounts!!

And the really cunning bit is that they are suggesting that schemes can self-certify their compliance. I think mortgage brokers had an equally cunning plan once.

The industry has to recognise that it has a problem with trust. As reported in the press, pension schemes have suffered problem after problem, whether DB or DC. Maxwell, Equitable Life, closing final salary schemes, plummeting DC asset values.  The article notes that 3.7m employees are in DC Schemes against 2.7m in DB Schemes. But this pales into insignificance against the number who are making no pension provision at all (See Daily Express – UK Facing Pension Crisis).

Sticking a tick box derived quality mark on a relatively small number of self congratulatory schemes is not the way to rebuild trust. We need to design solutions that encourage people to make some level of pension provision and that also encourage employers to help them. We also need to ensure the state system does not disincentivise modest provision. Any provision should be better than none.

We also need genuine simplification – can someone ensure that, next time round, HMRC has access to a proper dictionary?

In the current climate many employers are struggling. My concern is that the NAPF quality mark, however well intentioned, will result in both members and employers concluding that, if they can’t meet the 4% and 6% contribution levels required, then they might as well not bother. It does rather reinforce the view that the NAPF is dominated by larger employers and consultancies and is out of touch with the smaller and medium sized enterprises struggling to keep their heads above water.

The Government’s proposals for personal accounts are flawed but are at least a start and remove many of the barriers to entry that currently exist.

Finally, if the NAPF is going to have policy developed by a fictional comic character it’s a pity it opted for Baldrick rather than Homer Simpson. Homer’s policy might not have extended much beyond free access to donuts, beer and chilli, but at least the resultant damage would be easily contained.

We do lots of work with clients on managing their PPF levy looking to ensure they are aware of the issues and have taken steps to minimise the levy payable. Clearly a major component of the levy calculation is the Dun & Bradstreet failure score rating and we’re forever banging on about making sure that all the information held by D&B is up to date and accurate, otherwise it could be costing a business a lot of money unnecessarily.
Read more »

In these tough economic times Spence & Partners and their group companies have announced another year of sustainable growth. Turnover for the group companies topped £4m and profit before taxation was up 45% from £440,000 to £639,000 for the year ending 31 March 2009.

The company continued to expand in staff terms and increased headcount by 28.5% from 35 to 45.

Liz Fergusson, a director of the company commented “these are a fantastic set of results given the current economic conditions, and demonstrate the commitment by all our people to provide an excellent service for our clients. We have ambitious plans for the business, and have committed to significant investments in IT infrastructure, data security and document management all of which we believe will keep us at the forefront in our market.”

For further information please contact David Davison at Spence & Partners (www.spenceandpartners.co.uk) on 0141 331 1004.

Issued on behalf of Spence & Partners by Blueprint Media tel 0141 353 1515

Date: August ‘09

Whilst many graduates are bearing the brunt of the economic downturn and struggling to find graduate positions as most organisations have either cut or put a freeze on graduate recruitment, actuaries Spence & Partners are bucking the trend.

To meet the continued expansion of their business and to grow a strong talent pool for the future, the business recently recruited seven graduates to work in their offices in Belfast and Glasgow. Providing career opportunities in actuarial, pension consultancy and administration, our graduates are supported through professional studies in their chosen post graduate field and our aim is to provide interesting and worthwhile careers for all our people.

Liz Fergusson, a director of Spence & Partners commented “as a progressive actuarial and pension consultancy practice, Spence & Partners recognises the need to recruit and nurture the most talented individuals. Our mix of work provides challenging objectives; our people are encouraged to challenge the status quo, be creative thinkers and have a “can do” attitude”.

For further information please contact David Davison at Spence & Partners (www.spenceandpartners.co.uk) on 0141 331 1004.

Issued on behalf of Spence & Partners by Blueprint Media

Date: August 2009

ENDS

Northern Ireland actuaries Spence & Partners recognise the need to nurture talent and are keen to support their local communities. This year, we have provided placements to two of the first students studying toward a BSc in Actuarial Science at Queens University Belfast. In the third year of their degree course, students undertake a placement in an actuarial environment, for a minimum period of nine months.

As a progressive actuarial and pension consultancy practice, the students are given a broad range of work, with the potential to quickly contribute and participate in helping to achieve the objectives of the business, whilst working closely with senior qualified actuaries, trainee actuaries, pension consultants and administrators.

Ian Campbell, a director at Spence & Partners commented “since the Actuarial Science degree programme was established at Queens University Belfast, we have built a strong association with the faculty, and we have a keen interest in actuarial research and education. The quality and academic calibre of the students we have met is excellent, and we very much want to be an employer of choice”.

For further information please contact David Davison at Spence & Partners (www.spenceandpartners.co.uk) on 0141 331 1004.

Issued on behalf of Spence & Partners by Blueprint Media

Date: August 2009

ENDS

I see from an article in the Financial Times that something called the Marathon Club is quoted as being critical of the International Accounting Standard 19 (IAS19). The Club suggests IAS19 is responsible for the closure of Final Salary pension schemes as a result of its impact on Company accounts.

Being a child of the 70’s, and not the athletic type, the Club’s name initially conjured up images of people meeting in a darkened room, to indulge a slightly sinister craving for that chocolate and nut based snack bar better known to younger generations as Snickers. I guess they are trying to convey the message that pensions are about the long run, a bit obvious as names go, but better than a pretend word that sounds a bit like something worthy with a few extra letters thrown in – you know who you are Entegria/Xafinity/Dyspepsia.

Anyway, I agree that linking pension liabilities to AA corporate bond yields doesn’t make a lot of sense, per se, but then they go off in completely the wrong direction.

According to FT.com, “The Marathon Club is calling for accounting measures that allow assets to be measured at “fair” long-term values and liabilities to be calculated as the net present value of future benefit commitments and other outgoings discounted at a rate “consistent” with the valuation of the assets.”

The Marathon Club appears to be suggesting that your pension liabilities are somehow linked to how you invest your scheme assets, a view that I thought had long been recognised as fatally flawed. Trustees and employers faced with funding pension scheme liabilities won’t see their real liabilities, or the real cost to the employer, magically reduce because the employer puts a smaller number in its accounts.

Let’s be honest, the actual numbers in pension disclosures in a company’s accounts don’t really matter when it comes to the real world and actually funding pension schemes – apart from to Aon and its procession of “biggest one day increase/fall (delete as applicable) in pension deficits” press releases.

I actually think the Pensions Regulator, in its recent statement on scheme funding, re-emphasises that we have a flexible funding framework within which to work when valuing pension scheme liabilities. The statement encourages trustees and employers to recognise and measure their pension liabilities on a prudent basis but allows flexibility, including the ability to make allowance for the schemes investment strategy, when assessing the contributions required to fund any deficit.

I don’t think employers should be more or less prudent than trustees when recognising their pension liabilities. Nonetheless there is an argument, in accounting terms, for something that FRS17/IAS19 delivered, in however flawed a fashion, which is consistency of reporting. Allowing employers to set their own assumptions for accounting purposes, and potentially fudge the position, is a retrograde step. So, inevitably, the flexibility available when considering funding needs to be curtailed. I do think there is scope for a debate about how and where such liabilities are disclosed in an employer’s accounts, rather than just what the number should be. There is big challenge here for the IASB to deliver a reformed accounting standard.

Finally, FRS17 (and therefore IAS19) should be thanked for one, unintended, consequence. It had the effect, in its early days, of forcing employers and trustees to recognise, in many cases for the first time, the real nature and extent of their pension liabilities and the associated risk and uncertainty. It is this aspect of the FRS17 story, people finally beginning to wake up to the true nature and extent of their pension liabilities, rather than a set of unpalatable numbers in their accounts, that has caused many employers to close their final salary pension schemes. As I have commented previously there is no point in persevering with an unsustainable pension framework and we need a meaningful debate about how UK plc meets the challenge of providing adequate income for its citizens in retirement.