Developments in Employee Benefits law and practice

28 May 2019

Pensions: international comparisons

The House of Commons Library has updated its briefing paper SN00290 - Pensions: international comparisons. The paper compares the UK State pension with similar European systems and goes on to look more broadly at the structural differences in the sources of pensioner income across economically advanced countries.

Cost Transparency Initiative launches new tools to help pension schemes 

New tools helping pension schemes deliver greater value for money for millions of savers have been launched by the Cost Transparency Initiative. The new standards comprise of templates and guidance for asset managers, and other suppliers of services to pension schemes, designed to enable them to report costs and charges in a standardised format.

They will allow pension scheme trustees to make clear costs and charges comparisons across their different investment management suppliers and asset classes. This in turn will make it easier for trustees to scrutinise and challenge costs and performance and ensure savers are getting the best value for their investments.

The tools cover the vast majority of pension scheme assets and are expected to be adopted by schemes, consultants and asset managers representing around £2 trillion in assets under management. The Cost Transparency Initiative expects trustees to engage with their investment management suppliers immediately, and for asset managers to be in a position to report against December 2019 and April 2020 year-ends using the new Cost Transparency Initiative tools.

The templates and guidance are available to download directly from the Cost Transparency Initiative web page

TPR replaces trustee of DC pension scheme to protect members 

Pension trustees at high street retailer Dunnes Stores in Northern Ireland have been stopped from running the company’s defined contribution (DC) scheme by The Pensions Regulator following a catalogue of governance failures.

To protect savers, an independent trustee has now been appointed by TPR to oversee the Dunnes Stores (Bangor) Limited Management Pension Scheme. The acting trustees were found to lack the knowledge and understanding to govern the scheme properly.

The decision was made by TPR’s Determinations Panel because it was concerned the trustees’ failure to grasp their responsibilities was putting the benefits of 390 DC scheme members at risk.

This is the first time TPR has used its power to appoint a trustee primarily because of a lack of competence of the existing trustee board.

Retirement Readiness 2019 

Aegon has published its eighth annual Retirement Readiness Survey, in which it analyses how prepared individuals are for retirement and recommends a New Social Contract for retirement based upon its findings. 

The 2019 survey reveals that 68% is the proportion of current income workers think they will need in retirement but only 25% of today's workers believe that they are on course to achieve their retirement income. The survey also highlights that there has been little improvement in retirement readiness among workers as measured by the Aegon Retirement Readiness Index (ARRI), which in 2019 was 6.0, only slightly higher than the score of 5.2 recorded in 2012.

Brexit update

On 21 May, the Prime Minister, Theresa May, set out more detail of a Withdrawal Agreement Bill emphasising a ten-point offer in order to deliver the Bill through Parliament. Newly promised votes for MPs on a customs compromise and on holding a second referendum were, overall, received negatively meaning it was unlikely that the Bill would pass its first Commons vote.

Subsequently, the Prime Minister announced that she will resign on 7 June. There will then be a contest to decide who will replace her as leader of the Party and as the new Prime Minister. 

Separately, the European elections have just taken place. Nigel Farage’s Brexit Party has ended up with the most votes but the LibDems have also made gains. Both the Conservatives and Labour suffered losses.

Contact:

John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: john_wilson@jltgroup.com