Atkin trustees, actuaries, consultants & administrators

Our Response to the DWP's Green Paper

Security and Sustainability in Defined Benefit Pension Schemes: We are broadly in agreement with the conclusions that there is not too much wrong with the existing DB arrangements and are wary of making changes that might have unintended consequences, particularly for smaller schemes. We also make the following observations;

• there is insufficient supply in the long term gilt market to meet demand and therefore alternative long term matching assets need to be developed (particularly in a form that is accessible to smaller schemes);

• the mark to market valuation approach (particularly those shown in Company accounts) can encourage schemes to invest in bond type assets even where this might not be appropriate. It might be better that the Company Accounts only put on the balance sheet the discounted value of the defict reduction contributions;

• we would encourage more transparency from TPR as to how it evaluates the appropriateness of scheme recovery plans (particularly their covenant assessment) and that this information is made available to the Trustees;

• we advocate a review of the level of pension increases that schemes must apply to come up with a regime that is better matched to the expected cashflow needs of actual pensioners, one which offers more flexibility to make changes irrespective of how the Rules have been drafted and where some of the risks of underfunding is shared with the members;

• more engagement by TPR on stressed schemes and a greater willingness to consider innovative solutions for smaller schemes which leave the employer intact (rather than just asking whether or not the employer should be wound up). For instance, deficit contributions might be set at a level to cover PPF drift (with controls on the investment strategy to minimise interest and inflation risk) along with additional contributions contingent on future profits.

• we question whether consolidated schemes offer better value for money, better service for members and better management of risks. In particular, we are wary that these schemes might adopt a one-size fits all approach to setting an appropriate investment strategy and recovery plan.

• we are supportive of introducing a simplified benefit model which could offer a fairer balance between the members and the employers (and their current staff) and reduces the cost of administration. This could include removal of GMP equalisation and aligning normal retirement ages with the State Pension Age.

For a full copy of our response, please contact us.

 

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The service provided was at such high level that I have subsequently introduced Richard to other Final Salary Schemes and continue to be continually impressed with the level of service. Atkin are responsive and understanding and are quick to identify potential issues before they arise. Communications between the employer, adviser, Actuary, accountant etc. are excellent & I have no hesitation in recommending them.

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