Atkin trustees, actuaries, consultants & administrators

Current Issues - March 2018

DWP White Paper – Big changes possible: The DWP has published its ‘White Paper’ entitled ‘Protecting Defined Benefit Pension Schemes’. There will be further consultations before any legislation is passed:

• Consider giving TPR power to impose punitive fines upon employers who put their pension schemes at risk by willful or reckless behaviour.

• Strengthen the ‘notifiable events’ and ‘clearance’ regime to force employers to consider pension commitments when there is corporate activity.

• A new funding regime is proposed which will focus on how prudence is demonstrated when assessing a scheme’s liabilities.

• DB schemes may have to submit a ‘Chair’s Statement’ to TPR alongside the triennial valuation.

• Further consideration of ‘consolidator’ funds to allow employers to transfer their liabilities to a larger arrangement (for a fee).

By remarkable coincidence, Alan Rubenstein (former CEO of the PPF) announced the launch of The Pension Superfund on 20 March. This will be run as an occupational pension scheme that can accept bulk transfers. It will target well-funded schemes that are closed to future accrual. As an occupational scheme it would not be subject to the rigorous regulations of buy-out insurance providers and the premium to offload a scheme could cheaper than buy-out. It is not known whether the Pension Superfund would be covered by the PPF.

Auto Enrolment – Don’t forget the minimum contribution increase: According to research by NOW: Pensions, approximately 28% of senior business decision-makers in the UK are unaware that their minimum workplace pension contributions will increase on 6 April this year. The minimum employer contribution rises to 2% and the minimum employee contribution rises to 3% of qualifying earnings. The next increase is scheduled to take place in April 2019. Payroll processes need to be changed to allow for this and to identify employees affected and Employees should be reminded of the increase before payroll is run. Positive communication could lead to fewer withdrawals from the scheme.

TPR - new approach to small scheme valuations: TPR will be contacting a number of schemes with March/April valuation dates to ask questions concerning matters such as conflicts of interest, employer covenant assessment, investment review and contingency planning. This includes sharing details of their assessment of the Sponsor covenant, one of the suggestions we made as part of the consultation on the Green Paper.

Mortality improvements in decline: Longevity is improving at a significantly slower rate over the last six years compared to the previous few decades. Is this a trend or a blip?

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Atkin & Co have acted as our Pension Scheme advisors and Actuaries for over 5 years. We consider them to be extremely experienced and knowledgeable in the field of pensions and in our view are one of very few pensions specialists in the UK that can understand the the intricate workings of the more complex pension schemes. They have done some excellent work for us in connection with our pension scheme over the years.

Andrew, Independent Trustee Client