Atkin trustees, actuaries, consultants & administrators

Current issues - November 2018

Brexit – What happens if there is no deal:  As well as the volatility this might cause in markets, there are other, more practical issues that Trustees may want to be aware of including; payments being made to pensioners based in the EU; investments held in EU based funds and whether the exemption to the penal charge on overseas transfers will still apply.

In respect of the potential impact on markets, there are many different views out there.  A good starting point though is Jon Cunliffe, Charles Stanley's Chief Investment Officer, article on the market implications for each of the five potential Brexit outcomes. 

With the Bank of England’s dire warnings of the potential impact of a hard Brexit, Trustees may want to discuss contingency plans.  Whilst this should cover the overall investment strategy there are also second order effects such as reviewing disinvestment strategies which might capitalise losses or guaranteed transfer values which suddenly look very generous post Brexit.

It would also be sensible for Trustees to be talking to their sponsors about how they are viewing the different Brexit scenarios and how this translates into risks to the covenant and what mitigation may be planned.

GMP Equalisation – The road ahead:  The consensus opinion is that Trustees may wish to wait for further developments (particularly DWP guidance on pensions conversion and whether the High Court’s decision in the Lloyd’s case will be appealed) before rushing headlong into a GMP equalisation exercise.  However, there are some more immediate areas to think about;

 - Whether to make an allowance for GMP equalisation where liabilities are being extinguished (such as transfers)

 - Making sure that GMP equalisation does not cause any commutation lump sums to breach the relevant limits

 - Checking whether the Scheme has a 6 year rule in respect of arrears and discussing its potential implications

 - Assessing whether any other benefit rectification exercises should be put on hold in order to carry out a single exercise

PPF response to ruling that Compensation Cap is too low:  The Pension Protection Fund (PPF) plans to increase compensation payments in advance of any legislative changes, however, there have been no announcements as to how this might affect the amount of the PPF levy.

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Working as a graduate for an intimate company like Atkin & Co has provided me with the opportunity to apply my numerate skills in a practical way, the confidence to develop my own techniques to tackle challenges and the skills to communicate with a wide range of people from Senior Directors to members of pension schemes. Atkin & Co is certainly a company that I hope to achieve great success with.

Graduate Trainee, Atkin & Co