Atkin trustees, actuaries, consultants & administrators

Current Issues - June 2016

EU Referendum: We are already seeing markets react negatively to the recent polls showing the ‘Leave’ campaign with a small lead therefore Trustees may want to consider their exposure to the immediate aftermath of a Brexit vote and, if the majority of forecasts are to be believed, a medium to long term future of recession, higher inflation and falls in asset prices.

BHS – Who says pensions are boring?: Accusations are already been thrown back and forth in respect of the deficit left in the BHS pension scheme, although Philip Green has promised to sort out the pensions mess albeit without providing any detail.

British Steel – Unique or template for others?: The Government has started a consultation on proposals to reduce the British Steel Pension Scheme’s liabilities. One proposal being to reduce the level of future pension increases in deferment and payment into line with the statutory minimum. Whatever proposals are made, employers and Trustees struggling with intractable deficits may feel that special treatment for one (albeit massive) scheme is unfair. Employers and Trustees wishing to make their views known have until 23rd June to respond to the consultation.

To illustrate the one rule for one rule for another, we also had a High Court judgement in respect of the transfer of members to a new Scheme with lower pension increases as an alternative to winding up the existing employer. In order for a transfer to take place without members’ consent, an actuary needs to certify that the transfer will give rise to, broadly, no less favourable rights. Given that the increases were being reduced, member’s benefits were clearly less generous. However, the certificate was to be signed on the basis that the member’s benefits were no less favourable, after taking the security of member’s benefits into account. It being understood that the employer would have to wound up if the Scheme were to be unchanged and would most likely fall into the PPF where benefits would be reduced anyway.

The Judge ruled, with reluctance, that the security of member’s benefits should not be taken into account when assessing whether a transfer should take place without member consent.

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Thank you. Excellent communication, a rarity in this world of quick communication.

Member, MESL Pension Scheme