Atkin trustees, actuaries, consultants & administrators

Current issues - February 2020

Trusteeship – TPR sets out future expectations: The key points to note are:

• The code of practice on Trustee Knowledge & Understanding (TKU) will be updated and the Trustee Toolkit will be revised.

• No changes to governance standards for sole trustees are proposed.

• TPR will not require pension scheme boards to appoint a professional trustee.

Trustees may want to review TPRs response to note the direction of travel for trustee standards.

RPI vs CPI – consultation to be launched: The Government is consulting on whether to reform RPI by changing the methodology to that of CPIH (which is generally around 1% lower than RPI) prior to 2030. The consultation will be launched on 11th March. This issue will affect most schemes and Trustees should keep a watching brief and discuss with the Scheme Actuary.

Coronavirus: The ongoing Coronavirus (Covid-19) outbreak could have significant implications for DB pension schemes on their investments, membership and governance. Although much is still unknown and it is important not to over react, some commentators are estimating that the potential death rate at as many as 50 million lives globally. The risks to schemes are manifold and include;

• Impact on the company covenant either through disruption to wider markets, supply chains, consumer demand and their workforce

• Impact on investment markets as investors switch to perceived safe assets causing valuations of riskier assets to fall and safe havens to rise. This will in turn push gilt yields lower which is likely to increase the value of the liabilities

• Impact on membership if there is a spike in deaths which although this may reduce the value of the liabilities, schemes with longevity protection or significant death in service benefits may want to consider how this might impact

• Do advisors have contingency plans in place, particularly in respect of the management of cashflows in circumstances where Trustees/advisors may not be as available as they might be otherwise

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I have worked on a number of schemes with Atkin Trustees Limited and with Richard Bryant in particular. I found them to be a very organised team who focus on achieving practical and cost efficient solutions.

Michael M Jones, Partner, Charles Russell LLP