PlayPen coffee morning – 10.30 today – free link below
With the election fought and won, the new Labour Government has promised us a thorough review of workplace pensions.
The consensus view is that this should be about the 2017 auto-enrolment reforms, promised by The Theresa May Government for delivery in the middle of this decade. They haven’t happened but they are enabled. But do we really need a large scale review to adjust AE rates?
More fundamental issues lurk beneath the surface. The £40bn of tax incentives given to pensions need to be justified to the Exchequer, are they offering value for money or would this money be better deployed elsewhere – creating growth in the economy to enable us to afford better later life benefits out of general taxation (for instance).
Are our funded pensions behaving in the public interest or is the fiduciary duty confined to those in the funded pension schemes?
Should we be reviewing retirement income in the way the Australian Treasury is trying to? Are the tax rules surrounding the inheritance of pension pots encouraging hoarding rather than saving and how are we to help the millions who want a pension and can’t get the advice to do their pensions themselves?
You are cordially invited to join us at today’s online Coffee Morning in which Calum Cooper, Head of Pension Policy at Hymans will discuss Labour’s pension review.
With the review planned by the new government, and with the mood music open to harnessing the wisdom of industry experience: together, this is a once in a generation opportunity to shape a better retirement for today’s workers.
In the spirit of co-creation and sharing, Calum will explore elements of a wish list for Emma Reynolds, the new pensions minister. But nobody has a monopoly on wisdom. If you could make just one change happen, what would it be?
Calum chairs Hyman’s Partnership Council, founding advisor to Clara Pensions and is responsible for Pension Policy at Hymans Robertson. He’s passionate about positive change and helping clients achieve their goals.
With a breadth of pensions strategy, risk and digital expertise spanning two decades, Calum brings a collaborative and creative approach to advice. Always focused on making progress against clear and shared long-term objectives.
Outside of work he’s an enthusiastic cyclist, rusty guitarist and a proud dad with two energetic boys Harris and the mighty Quin.
For readers of this blog, the event is free – use this link.
For paying members:
https://lnkd.in/eBZEYU-s
For non-paying members:
https://lnkd.in/eK5_5zTa
With less advisers available how will the advice gap issue be resolved. https://on.ft.com/3VZXv2F
Debatable how many provide advice, as opposed to something that suits the commercial interest of the organisation they work for.
– Covenant advisers have successfully lobbied for a formalised requirement for covenant advice
– professional trustees (ie ex DB actuaries and ex DB lawyers who allowed the decimation of DB for working people) are pushing for more regulation and professionalism for Trustees
– “investment advisers” promoted funding models that relied on more assets under management ( and AUM fees) and removal of investment targets that they could be assessed on (.LDI)
etc etc.
I have a feeling companies, trustees and members might do ok with fewer advisers, but with better advice …
On DC pensions (to be renamed PB – Projected Benefit – pensions), I would remove the ‘cliff-edge’ risk of pot conversion at retirement. We should transition from an accumulation fund (with a ‘growth’ portfolio) to a decumulation fund (with an ‘income’ portfolio) over a period of years ahead of actually starting to draw down an income. By sourcing pension payments predominantly from income generation, you substantially reduce the rate at which investments are sold and the associated market risk.
I have two for DB, not sure which most important, I thought I’d posted this last week.
One, allow trustees and sponsors to agree to base funding requirements upon robust ALM rather than using discounted values. Actually, I’d prefer to see the discount rate process banned for this purpose as incredibly unfit for purpose (www.discrate.com). In 2017, I suubmitted that to DWP.
Two, any claims to funding prudence must be openly justified. That requires the actuaries to explain and justify their best (or neutral) estimates.
You also posted this on Friday, Jon, and I entered it in to the chat on today’s webinar when I saw you weren’t present. Calum said he agreed with you on ALM, but was less agreeable on TAS 300, when William McGrath raised TAS 300 in the context of buy-in/buy-out.
Saying it in triplicate can do no harm?!
As you will know, the earlier version of TAS 300 required scheme actuaries to explain the difference between “neutral” and “best estimate”
assumptions. A backward step by the actuarial profession, in my view.
Thanks, Derek, I thought it was on this thread and I couldn’t see it so that I assumed I hadn’t. Yes, TAS300 was watered down and one wonders why. While I accept that best (neutral) estimates aren’t easy, actuaries should be prepared to make the effort and their clients should demand them, especially the sponsors.
In 2016 the Financial Reporting Council argued thus:
“We consider that it is important that trustees understand the level of prudence in the assumptions used to calculate technical provisions. The Pensions TAS (paragraph E.2.10) requires aggregate reports to include a comparison of the technical provisions with a calculation of liabilities using neutral assumptions. We have had feedback that other methods might better explain the level of prudence in technical provisions. We understand the feedback and have decided to modify the approach in TAS 300 to require an indication, rather than quantification, of the level of prudence.”
I wonder who provided that “feedback”
about “other methods”.
I doubt it can have been trustees as recipients of TAS 300 reports.
Smacks of regulatory capture to me.