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The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019 (SI 2019/982) have been laid and require both defined contribution (DC) and defined benefit (DB) schemes to explain policies, in their Statement of Investment Principles (SIP), in relation to:

  • how they monitor the investee company on capital structure;

  • how targeted portfolio turnover

or turnover range is to be defined and monitored;

  • how they manage actual and potential conflicts of interest in relation to their engagement;

  • details of their arrangements with their asset managers; the duration of the arrangement, how the scheme incentivises the asset manager to align investment strategies and decisions, and

how they monitor portfolio turnover costs incurred by the asset manager;

  • publishing their revised engagement policies which explain, amongst other things, how they have cast their votes in the general meetings of companies in which they hold shares.

In essence this is all about stewardship: the responsible allocation and . . .

14 June 2019  

The Pensions Scams Industry Group (PSIG) has launched an updated version (v2.1) of its Code of Good Practice in Combating Pension Scams. The new version came into effect on 10 June 2019 and applies (voluntarily) to all transfer requests processed on or after that date, even if the request for a transfer was received before that date.

Key changes have been made in the following areas:

  • The Cold Calling ban
  • TPR/FCA ScamSmart campaign and TPR Threat Assessment update
  • Money And Pensions Service (MAPS) reference
  • TPO Determinations update and implications
  • The rise of claims management firms
  • FCA Letter "Managing the risks of Defined Benefits to Defined Contribution transfers"
  • FCA-TPR-TPAS joint protocol
  • PSIG's Scams Survey Pilot 2018
  • Revised Action Fraud reporting guidance
  • Additional case studies
  • During 2018, PSIG has also published a report detailing information gathered on pension scams from three pilot organisations. The chief observation is that there appears to have been a move from pension liberation to pension . . .

    11 June 2019  

    The Financial Reporting Council (FRC) has concluded that no change will be made to the assumptions set within the Actuarial Standard Technical Memorandum 1 (AS TM1). The current version (v4.2 Oct 2016) will remain in force, until further notice, for Statutory Money Purchase Illustrations (SMPIs) produced in the year beginning 6 April 2020.

    The stated main reasons for this conclusion are:

  • Existing assumptions remain within a reasonable range and there is value in consistency from year to year.
    • The potential for the impending Pensions Dashboard to revolutionise the way that projections are performed and presented, in ways difficult to predict currently.

    • The Continuous Mortality Investigation (CMI) is anticipating

    that next year they will issue a new base table for mortality and are looking to increase the flexibility available to users of their mortality tables. It is uncertain what impact this may have on the annuity market in practice.

    • The UK's EU exit continues to remain a source of uncertainty.

    • The annuity market has . . .

    11 June 2019  

    In 2012, Mr Hymanson acquired a certificate of Fixed Protection, preventing his lifetime allowance decreasing from £1.8m to £1.5m. A condition here is that contributions must cease; Mr Hymanson continued to pay company rental payments into his pension (failing to cancel Standing Orders), believing this would not be deemed a contribution. HMRC did not agree and revoked protection.

    Mr Hymanson took his case to the

    First-Tier Tribunal which ruled, in November 2018, that it was unreasonable for HMRC to revoke protection after what had been an honest mistake.

    HMRC informed the Pensions Industry Stakeholder Forum meeting on 9 April 2019 that it was appealing to the Upper Tribunal (UT/2019/0027). Since then however it has decided not to pursue its appeal - which is unusual. The only explanation forthcoming so far from HMRC is a note included in the

    official minutes of the meeting, published this week:

      "HMRC update: due to the particular circumstances of this case, it is not now appropriate to continue with the appeal to the Upper Tribunal. Hymanson was a First Tier Tribunal case and as such does not set a legal precedent. It remains HMRC's position that the appropriate . . .

    07 June 2019  

    The Pensions Regulator (TPR) has published its analysis of the expected positions of defined benefit (DB) pension schemes with valuation dates between 22 September 2018 and 21 September 2019: so-called Tranche 14 or T14.

    TPR has naturally made a number of approximations and does not hope to account for all scheme-specific characteristics. With only publicly available data to go by, this analysis does not replace scheme-specific assessments

    of potential employer affordability.

    With the above in mind, TPR's work shows that changes in market conditions - double-digit returns from most major asset classes - mean that deficits on a technical provisions (TP) basis for its DB universe are expected to be marginally better at March 2019 relative to March 2016.

    However, the improvement has not been to the extent expected by TPR: deficit reduction contributions (DRCs) will have

    to be increased in order for trustees to maintain their current recovery plan end dates.

    Despite the majority of employers seeing an increase in the nominal value of their profit and shareholder funds over the three years, there has not been a commensurate increase to DRCs: for FTSE350 companies, the ratio of dividends to DRCs has increased from . . .

    06 June 2019