Atkin trustees, actuaries, consultants & administrators

Current Issues - December 2017

2018 Scheme Return – Data Quality: TPR are re-emphasising the Trustees obligations in respect of data quality. They have asked that Trustees disclose their ‘common’ and ‘conditional’ data scores as part of the 2018 Scheme Return in order to assess whether they need to take further action. Trustees should discuss with their advisors the immediate requirement for satisfying their obligations and being in a position to provide scores as part of the Scheme Return.

Legal Entity Identifier – Act now: Scheme’s that have direct holdings in investments that are bought and sold over a recognised exchange, such as shares and bonds, will need to obtain an LEI by 3rd January 2018. Most investment managers will have already contacted Trustees if they believe an LEI is required. Trustees who are unsure, should contact their investment managers as soon as possible.

Assessing employer covenant – useful information for Trustees: The Employer Covenant Working Group (ECWG) aims to raise standards and awareness for employer covenant providers. They have recently published a guide for their members on assessing covenant in distressed conditions.

Company accounting disclosures: Yields on corporate bonds remain stubbornly low and inflation expectations broadly unchanged leaving many companies with the same pension accounting deficits. For simplicity, company directors often adopt the same demographic assumptions as those used by the trustees for the funding valuation. These may include margins for prudency which should not be included.

Consolidation of pension – don’t be caught napping: There have been a spate of consolidations/out-sourcing agreements within the pensions industry, including Scottish Widows/Clerical Medical have outsourced to Diligenta and JLT/Broadstone and Mitchell Consulting have merged/Xafinity and Punter Southall have merged. 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? Time for a bench marking exercise!

• 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? Time for a bench marking exercise!

• 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. Time for a bench marking exercise!

If you would like some help to understand how the proposed merger might impact on you and whether you are still being offered value for money, then please contact Atkin & Co – specialists in small to medium sized pension scheme solutions.

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Special mention must go to the team who have an infectious enthusiasm for getting the job done; without exception. All are flexible, approachable and their almost tangible motivation means much pride is obviously taken in everything done. It is this attention to detail that has helped further reduce costs and burden and brought about increased levels of efficiency that no tender could establish.

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