A lack of understanding about ‘company beliefs’ and how they impact decision making around pensions schemes could endanger the success of DB endgame strategies claims Hymans Robertson. The leading pensions and financial services consultancy warns that as these beliefs shape company decisions it’s imperative for them to align with strategic pensions choices. It’s worried that this is being neglected and can lead to unnecessary and damaging misunderstanding between sponsors and trustees.
Commenting on the concluded DWP Consultation ‘Permitted charges within Defined Contribution pensions schemes’ Michael Ambery, Partner says:
“We are pleased to see that today’s Consultation, Permitted charges within DC pensions schemes, has protected small pension pots from erosion and becoming worthless. This commitment will protect those with relatively small pots having these diminished by investment charges. However, we question whether this goes far enough, and believe £100 remains a very small protection value and relatively insignificant in respect of the de minimis level. This level could have been much larger and should be reviewed for relevance to afford pension savers much greater protection. We remain concerned that the operational impact of changes to protect members leaves the administration and provider teams little time to ensure protections are in place.
Commenting on the Government’s announcement that the UK will be the world’s first net-zero financial centre, Simon Jones, Head of Responsible Investment, Hymans Robertson, says:
“In the proposals announced today, the UK Government is seeking to make planning for the transition to net zero and the disclosure of those plans a condition of business. Although not initially set to be a mandatory requirement, better and more comprehensive disclosure will allow investors to effectively scrutinise and challenge the plans that organisations have in place. But we need to remember that the challenge is not just one for investors, but for all parts of the economy. Having transition plans will only be effective if there are also clear and strong policy pathways, backed by regulation where necessary that require companies to change. This is what will ultimately drive a reduction in emissions across the real economy."
Hymans Robertson, the leading pensions and financial services consultancy, has appointed Claire O’Neill to further expand its Risk Transfer team.
Claire joins from Mercer’s Risk Transfer team where she focused on helping clients reduce the risk in their defined benefit pension schemes through a range of de-risking strategies, including both risk transfer transactions and member options exercises. Claire has worked and advised on a variety of bulk annuity transactions, ranging from £13m to £1bn in size.
Industry experts from Hymans Robertson give their comments and feedback on the key annoucements from this year’s Budget speech.
"We are supportive of the FCA’s proposals to extend the range of vehicles for pension schemes to access long-term investments such as illiquids. In particular, we agree with the proposal to remove the upper limit on exposure to illiquid investments for LTAFs, which addresses one of the current constraints with existing fund types that has limited innovation. Although not required, we also share the FCA’s positive view on work carried out by the Cost Transparency Initiative and that this should be used in the context of LTAFs where at all possible."
"It is good to see that pension schemes are now higher up the corporate agenda when planning corporate transactions. This is not only as a result of these forthcoming notifiable events changes, but also due to the broader suite of new regulatory powers introduced earlier this month. Now the implications of corporate activity on the pension scheme have to be considered at an early stage, with potential mitigations thought through."
Commenting on the SEI Master Trust purchase of Atlas, Michael Ambery, Partner, Hymans Robertson says:
“The announcement about SEI’s purchase of Atlas is positive news. We have anticipated a consolidation of Master Trust providers in order to reach a suitable size and scale. This is the second headline consolidation of Master Trust providers this year and a movement of well over £1bn to SEI in the purchase of Atlas. It will give SEI considerably more scale and the ability to refocus proposition and direction to continue to grow both assets under management and employers."
Commenting on the DWP Consultation outcome ‘Government response: Simpler annual pension benefit statements’ Kirsty Moffat, Head of DCC Engagement, says:
"We welcome the Government's response to this consultation, in particular the delay of the introduction of simpler annual benefit statements until October 2022. This will allow schemes more time to adopt the requirements ensuring quality and establishing efficiencies. We are supportive of the two-page benefit statements and the implicit advantages for members, but maintain that they should be rolled out to all DC schemes rather than only to those used for Auto Enrolment purposes."
Over a third (38%) of DC pension members at pre-retirement age (aged 50-65), remain unaware of their tax free pension allowance, while a third (32%) believe, incorrectly, that they can withdraw their entire pensions pot without paying tax, reveals a new survey from Hymans Robertson. Nearly a fifth of survey respondents (17%) also wrongly believe they don’t have to pay any tax on income from their pension, a stark statistic given the vital decision-making facing this group. The findings are an important reminder to employers of the need to review their current support for their members as they face decisions about their pension, especially as they reach retirement age. Employers must establish if they could offer more help through online tools and workplace support, warns the leading pensions and financial services consultancy.
Commenting on the Ignition House report ‘Value Matters — But Show Me the Pension Charges I Pay’ published today, Laura Andrikopoulos, Head of DC Governance says:
“The Ignition House report launched today provides an illuminating insight into members’ views on the costs and charges in DC pension schemes. The key findings show that members fully appreciate that value is more than headline costs and charges and that it is outcomes at retirement that really matter when comparing schemes rather than a simple focus on charges – although it is very important members understand exactly what these charges are and consist of. The research also highlights that members expect their employers to scrutinise provider provision and continue to push for maximum value for their employees; this is the crucial task of any Governance Committee overseeing outsourced provision and a continuing focus for trustees.”
Hymans Robertson confirms that total pension scheme buy-in and buy-out volumes over the first half of 2021 reached £6.8bn, with a further £0.9bn ‘Assured Payment Policy’ transaction, as it publishes its final half year analysis report. These are lower than average volumes with most insurers writing significantly less business than they usually would over this period, with smaller and mid-sized transactions dominating the market during that time. This is due to the fact that volumes were particularly high at the end of 2020, which led to a naturally quieter period at the start of 2021.