Atkin trustees, actuaries, consultants & administrators

Consolidation of pension providers – don’t be caught napping

There have been a spate of consolidations within the pensions industry, including Scottish Widows and JLT/Xafinity and Punter Southall/Clerical Medical and JLT. It will be important to understand what the new arrangements will be and to read the fine print.

In particular,

• How will your costs change? Will you need to sign up to a new fee arrangement? What does this say in respect of termination? What services are covered and are they equivalent? How will non-core services be charged for and at what rate? Are these fees reasonable?

• Will your service levels change? Will you retain the same consultant or someone of equivalent experience? Is it worth asking that the new merged provider commit to leaving you with the same consultant for next three years or someone of equivalent experience who you need to agree to? Will it reduce the level of face to face access you have with your consultant.

• What are there long term goals? Is there a danger that the providers focus will shift and some of their clients (particularly the smaller ones) might be left behind. Can they offer any reassurances that this will not happen? In particular, how do they intend to manage your investments and what approach will they take to your valuation. Will it be an off the peg solution developed for larger clients being shoe horned into a small scheme proposition.

• How the scheme is to be managed during the transition, in particular, has there been sufficient engagement on GDPR?

We believe that these concerns are justified and, given that their existing advisors may have conflicts of interest, that the Trustees (and the Company) should act now to protect their interests and consider obtaining their own separate advice.

Capita woes continue: You may have seen in the press that Capita appear to be having something of a hard time at the moment with a £700m cash call on it’s shareholders, axing of its dividend and a hefty profit warning which saw its share price fall by nearly 50%, wiping £1.1bn off the company’s stock value. With the example of Carillion proving that there is no such thing as too big to fail, we have spoken to a number of schemes who are worried about what this might mean for them over both the short and long term, as the management assess their priorities and look to areas where they are best able to deliver profits to their shareholders.

We are experienced in all areas of pensions and specialise in providing practical, innovative and proportionate advice based on a thorough understanding of our clients. We would welcome a chance to talk to you about your Scheme and the challenges that it is currently facing.

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