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Pension Funds
Insider

Dave King joins Aries Insight

Aries provides tools for pension managers, trustees, advisors, and administrators to handle the complex regulatory environment for pensions in the UK.

It combines knowledge of pensions with systems engineering to meet the needs of pensions professionals.

Dave King will join the company from Mercer, where he spent 20 years in a technical advisory role.

Before that he was a technical support consultant with The Pensions Trust and he is a Chartered Insurance Practitioner and an Associate of the Chartered Insurance Institute.

He said: "Having been a long-term user of Aries in my previous roles, I have always benefitted from the simplification of legislation and technical expertise they provide.

"So the opportunity to work with them to help Aries members was too good to miss, at a time when the industry is swamped by changing legislation and requires expert support more than ever."

Ian Neale, director at Aries, welcomed Mercer to his team: "With an ever-changing landscape and new legislation around each corner, there is a greater demand in the industry for up to date technical knowledge and information.

"As an energetic and experienced technical pensions man, Dave's abilities will enhance the service provided by Aries in many ways - from researching and drafting materials on new legislation, to answering members' queries and providing on-site training - Dave will be a key player for us in ensuring our continuing success."

The Aries Pensions System is the foundation of the pensions technical support service now used by more than 100 organisations throughout the industry: consultants, administrators, life offices, pension funds and specialist providers.

First published 25.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

The Olympics, marginal gains and your pension deficit

That's simple – focused investment in professional coaches, support staff and bleeding-edge technology and the aggregation of marginal gains. There must be some lessons here for the pensions industry?

I'm old enough to remember when British sporting success was endearingly rare.

Think back to Atlanta 1996 – the British team wins a solitary gold medal. 36th in the medal table, this was Britain's lowest-ever ranking.

Fast forward a mere five Olympic cycles and Team GB wins 27 gold medals – the largest haul since 1908 – and occupies second place in the medals table between the United States and China.

What went so right? In a word: investment. Lottery funds channeled into Olympic sport have grown from £60m before the Sydney Games to £280m in the Rio Olympic cycle.

However, I think the more important point is this – success has not resulted simply from throwing money at the problem. UK Sport has focused investment on those sports that have delivered success.

This "no compromise approach" has seen British Cycling's budget steadily increase, while funding to other sports has been cut.

And success in the velodrome has been phenomenal.

Other nations may wonder how this pre-eminence was achieved in such a short time, but to my uninitiated eye the answer is simple.

All that lottery money was spent in a focused and highly intelligent way.

Having identified the athletes with the potential to succeed, the team recruited the very best coaches, dieticians and psychologists from across the world.

Athletes who did not perform were dropped, often brutally – the mentality spoke volumes: medals or nothing.

And then, of course, there is the technology.

Chris Boardman's "secret squirrels" wrung every ounce and aerodynamic advantage out of each component of bike and rider. From the obvious wheels, helmets and skin suits, to every bolt, nut and even the riders' socks.

The attention to detail was pathological and I believe this culture of continual innovation and improvement, or "aggregation of marginal gains", was the facet most difficult for other teams to emulate.

In contrast, the broader lessons are universal, and eminently applicable to pensions:

Appoint the best "coaches" – in our world this means the right professional trustees, for whom pension scheme governance is a full-time, deliberate career choice, and advisers who are pragmatic and outcome focused.

Whatever the challenges your scheme is facing, chances are the professionals have been through it before and can share their knowledge and experience.

Establish a framework for success and then aggregate marginal gains – this entails building governance structures that are comprehensive in their scope, but evolve over time.

Excellent governance spans a very wide range of pensions disciplines, and a solid platform is an essential basis for continual improvement in each area.

Pay attention to detail: look beyond investment risk and consider liability and operational risk, for example.

Demand medals or nothing – Okay, perhaps this is too literal an analogy. But it is crucial to set objectives for your scheme, form a strategy, and measure success over time.

If you do not know where your scheme is heading, then how can you navigate there? Clarity and accountability will also allow you to manage your advisers better and improve relations between trustees and employers.

Cry havoc and let slip the secret squirrels? Technology has an increasingly important role to play in pensions, from asset liability modelling to member engagement.

And finally? Choose cycling, not basketball. That is to say, invest time and resources in areas that will have the most positive outcome on funding or member outcomes.

Focus on what can be achieved – many trustees obsess over investment returns, but ignore costs, for example. You know which areas are most important for your scheme. And if not, and Sir Dave Brailsford is busy, we'd be happy to help.

Written by Matt Binnington,Manager Business Development, PTL.

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Pension Funds
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Young people struggle to save, says PLSA

The research found that, contrary to popular opinion, the so-called 'YOLO (you only live once)' generation said they got more satisfaction from saving than from spending.

But despite good intentions, respondents to the survey said they struggled to invest savings in long term investments such as a pension or ISA.

Joanne Segars, chief executive of PLSA, said although short term pressures prevented younger people from committing to long term investments, the opt out rate for workplace pensions was low.

She said: "Younger savers staying in their workplace pensions are smart - automatic enrolment provides them with a hassle-free way to save for the long-term – they don't have to think about the investment strategy, or choosing the product, or moving their money, rthey just have to keep saving.

"Their own contributions are doubled by contributions from their employer and tax relief from the government; and they have time on their side – early savings benefit from compound interest, investment growth and time to recoup any losses."

Eighteen to 35 year olds are no different from everyone else in their ambitions to save for a secure future but, Segars said, given the current rock-bottom interest rates and low wage increases it wasn't surprising they felt under pressure.

Our research suggests many 18-35 year olds shy away from the sort of investments that give better returns over the long-term, but it also suggests that where a financial decision or situation becomes a fact of life, for example student loans, this group quickly accepts it and adapts.

"We've seen this behaviour in workplace pensions with a very low opt out rate from automatic enrolment of just 7% by those aged under 35."

First published 26.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

DB schemes will buy £300bn of gilts

The findings are from the company's annual Risk Transfer Report, which looks at developments in the bulk annuity market.

Key findings also include a prediction that the demand is likely to exceed capacity in the market by £125bn.

For the report, Hymans Robertson analysed all FTSE 350 sponsored DB pension schemes, and assessed the appetite of each insurer operating in the bulk annuity market to transact.

Head of buyout solutions at Hymans Robertson, James Mullins, explains: "Our findings show that, over the medium term at least, demand from DB pension schemes to complete bulk annuity transactions is likely to exceed the capacity insurers active in this market are able to supply."

Mullins says to get a sense of the scale of the mismatch, assume a 5% increase in insurer capacity year on year, then in ten years that would equate to £225billion of supply.

"That's still a £125billion short of the total demand – even when taking a more optimistic year-on-year of 10% over the next 10 years, we'd still be looking at a £65billion shortfall."

Discussing what schemes should do, Mullin advised taking proactive steps to capture opportunities to reduce risk.

"Scheme finances have been stretched over the past decade, with the situation getting a lot worse post-Brexit.

"Rather than sitting tight and waiting for financial conditions to improve, trustees and sponsoring employers need to take proactive steps to chip away at the problem and capture opportunities to reduce risk in stages.
New recruits
Meanwhile, Hymans Robertson has made two senior appointments to its Life and Financial Services team.
John McKenzie, who was a consulting actuary and principal in Milliman's UK Life practice, joins as Head of Insurance Transfers and Reporting.

He has extensive consulting experience, has provided strategic advice across a number of corporate reorganisations, and is one of the UK's leading Independent Experts on insurance business reorganisations and Part VII transfers.

Theresa Chew joins the firm as Head of Transactions and Structuring.

In her previous consulting roles at EY, Tillinghast Towers Perrin and Deloitte, she advised on some of the largest and highest-profile M&As, IPOs and corporate restructures in the UK life insurance industry.

Theresa's role at Hymans Robertson will focus on growing its M&A advisory and transaction structuring capabilities.

First published 25.08.2018

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
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Investing in a future

As the famous scientist Niels Bohr said, "prediction is very difficult, especially if it's about the future." Well, the Referendum has just made it a whole lot more difficult.

By all accounts though, the UK government will begin EU exit negotiations with a primary objective of maximizing continued access to the Common Market. The UK financial services industry in particular will be keen to see that happen.

We're told UK-exit will take at least two years from the moment the government presses the button by invoking Article 50. Some observers say ten years, and who's to say they're wrong?

Regardless of how long the process takes, the UK will remain subject to Treaty obligations for the duration – and to some extent quite possibly beyond the exit date, depending on the final outcome. So we cannot suddenly ignore post-23 June EU developments.

Already on the horizon we have the IORP II Directive, due to be formally agreed by the European Parliament this October and transposed within two years into UK legislation. Likewise the formidable General Data Protection Regulation, with a deadline of 25 May 2018.

I've been reading the latest Condoc from the European Commission, on a potential EU personal pension framework. In talking of "purchasing a personal pension product" it seems to continue the unfortunate tendency to liken starting a pension saving plan to buying a bottle of shampoo.

It's worth persevering though, because it recognises that the long-term nature of personal pensions "should help generate funding for long-term illiquid investments (for example infrastructure or unlisted SME equities)". This verges on fresh thinking.

In the current environment, where uncertainty exacerbates the tendency of personal pension savers to freeze in the face of ultra-low interest rates, this is surely welcome. Dissatisfaction with returns from conventional investment routes, including index tracker funds, is already leading some into alternatives such as peer-to-peer lending.

Maybe the time has come to offer a way for individuals to invest in the kind of lucrative opportunities represented by Private Finance Initiative (PFI) projects, where the rate of return expected to be earned by private sector capital in the project is over 12%.

The Condoc distinguishes a 'European personal pension account', which it likens to a US Individual Retirement Account (it might have said a UK personal pension), from a 'European personal pension product' in that the former does not pre-define investment options. The role of tax advantages would be similar.

We live in a time when short-term thinking has become dominant, not least among politicians and policy-makers. Companies report quarterly, share prices determine executive bonuses; and government action to control volatility such as quantitative easing only serves to worsen the outlook for pensions.

We need to find ways of aligning long-term savings with assets which can be relied upon to deliver income decades ahead. So far, pension arrangements have been largely dependent on a wholly-inadequate supply of index-linked gilts: an asset category which is arguably a poor investment at a time when yields do not even match inflation.

Alternatively we could ignore the falling support ratio (the number of people of working age divided by the number over the state pension age) and the growing anxieties of our children and grandchildren, and party like there's no tomorrow.

But I'd rather invest in a future.

Ian Neale, Director, Aries Insight.

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Pension Funds
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DB deficit hits £1trillion

The company uses its 3DAnalytics, which provides real-time updates to the funding positions of Defined Benefit pension schemes, to assess deficit levels.

Hitting the £1trillion mark is due to further falls in gilt yields as the government's quantitative easing programme comes up against unexpected challenges, such as pension schemes holding onto longer-
dated government bonds.

The recent reduction of the base rate of interest by The Bank of England increased demand for gilts, making it less likely that investors will sell to the central bank.

Every time the base rate is reduced, DB deficits are pushed up, putting greater pressure on trustees to hedge risk – and the most impactful way they can do this is through gilt-based investments.

Hymans Robertson partner Patrick Bloomfield, said the sustainability of DB schemes is under the spotlight: "We need to caution those in DB schemes against a rush to the exit, despite the allure of so called "Freedom & Choice."

"Transfer values are at record highs, but once a DB member transfers out, there's no going back and finding a better deal elsewhere might not be possible for the majority, without taking on more personal risk" he said.

Bloomfield emphasised the importance of strong business support for schemes to weather the current storm.

He said: "Only members in schemes with less robust sponsoring businesses need to be worried, but in the current climate it's unlikely we'll see a sudden rush of more schemes falling into the PPF."

"We need to remember that corporate failures in the UK continue to be low, with underperforming businesses propped up by low interest rates and cheap borrowing."

First published 18.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Support for retirement quality mark

The consultation, by The Pension Quality Mark board, found widespread support for the role an RQM could play in helping trustees to support pension scheme members, and helping savers secure a good retirement income.

Respondents felt that a quality mark would assist trustees in signposting scheme members to products that have been assessed as being good, based on the quality of their governance and communications.

The original consultation document was published in November 2015 and it sought views on the role of an RQM and the standards it might use.

An RQM could help support the development of a robust in-retirement market that operates in the interests of savers by setting out the standards of what good looks like in relation to the governance, default investments, member alerts and the communication of charges and risk.

Adrian Boulding, chair of the Pension Quality Mark board, said they had been "greatly encouraged" by the strong support from across the industry.

He said: "We will continue to refine the standards and develop the infrastructure to support the RQM, and expect to launch the new mark later this year."

The organisation says it will carry out further discussions with pension schemes and providers interested in becoming RQM award holders, as well as the wider stakeholder community.

The Pensions and Lifetime Savings Association welcomed the RQM.

Chief executive of PLSA and Pensions Quality Mark executive director Joanne Segars said: "There's a significant amount of uncertainty and worry about the new retirement income decisions savers are having to make."
"Savers and those guiding them need help to understand what good looks like in this new breed of retirement income products."

PLSA believes that developing a set of "clear and recognisable" quality standards for retirement income solutions that people can trust will help product providers develop the type of product savers need, Segars added.

First oublished 18.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

FTSE 100 companies pay more in dividends than pension contributions

In its annual report, LCP said that by the end of July 2016, the deficit was an estimated £46bn, compared to £25bn earlier in the year.

The LCP report, which looks at how FTSE 100 companies are managing their pension risk, found that FTSE 100 companies pay around five times as much in dividends as they do in contributions to their defined benefit pension schemes.

LCP says the recent collapse of BHS and the potential sale of Tata Steel UK highlighted the significance of pension liabilities.

Bob Scott, author of this year's report and LCP senior partner, said: "Both these underfunded pension schemes have highlighted the significance of pension liabilities and the impact that a large defined benefit scheme can have on a UK company."

"Companies with large deficits may see pressure from the Pensions Regulator on their dividend policy in light of the Select Committee's report into BHS," he added.

The report also found that FTSE 100 companies put more than twice as much money into defined benefit (DB) schemes as they do into defined contribution (DC) pensions - £13.3bn compared with £6bn – and the gap has grown in recent years.

"Not only is this a drag on company performance and the wider UK economy, but the relatively small contributions going into DC schemes may be storing up problems for the beneficiaries of those schemes when they come to retire," Scott said.

LCP is calling for pension scheme deficits to be cut by reducing the level of increases they are obliged to provide.

It says allowing companies to alter the increases applying in their pension scheme to the Consumer Price Index would reduce FTSE100 pension liabilities by around £30bn.

"The government should end the uncertainty – the legal lottery – by allowing companies to move from RPI to CPI, subject to safeguards," said Bob Scott.

"The safeguards are important as they should not automatically allow a profitable company with a large pension surplus to increase that surplus by reducing benefit, but they could, provide relief to a company with a large deficit, where the trustees agreed it was in the members' interests for benefits to be reduced."

First published 18.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Interest cut adds pressure to pension schemes

UK interest rates have been cut from 0.5% to 0.25%, a record low and the first cut since 2009, along with a raft of additional measures, including quantitative easing.

The Bank of England Governor Mark Carney also signalled that rates could even go lower if the economy worsens.

The Pensions and Lifetime Savings Association (PLSA) said the cut was cause for concern for pension schemes.

PLSA director of external affairs Graham Vidler said: "Pension schemes have battling historically low interest rates for more than eight years and further cuts will put them under even greater pressure."

Vidler said although he recognised the need to protect the economy, strong consideration needs to be given to the negative impact this will have on the 6,000 defined benefit (DB) pension schemes.

"The introduction of further quantitative easing will also put pressure on pension schemes," he added.

deVere Group CEO Nigel Green described the announcement as "a toxic combination" for pensioners and savers.

He said: "By pulling the trigger and cutting interest rates for the first time in seven and a half years today and boosting quantitative easing, the Bank of England has delivered yet another painful bloody nose."

The interest cuts could add a new dimension to the ongoing debate around the sustainability of DB schemes and PLSA has urged the Pensions Regulator to step in.

"Given the current economic conditions we are calling on the Pensions Regulator to use its existing powers to take a proportionate and flexible approach to scheme funding in these uncertain times," said Graham Vidler.

"It should give particular consideration to schemes going through a valuation cycle at the moment."

Patrick Bloomfield, partner at pensions consultancy Hymans Robertson, said schemes should remember the long-term and avoid over-reacting.

"The past month's events highlight the need for schemes to become more resilient to risk, and place much closer attention to assessing the financial ability of their sponsoring company to support the scheme now and in the future," he said.

First published 11.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Pensions Dashboard and the Administrator's Role

Dashboard is coming and the timescale for delivery is tight, which means many of us will have to work hard and fast to make it a reality.

2019 seems far away and we have other priorities in the meantime, so it is tempting to put the creative juices for dashboard aside for now, but that would be a mistake.

We certainly need to know considerably more about what dashboard will look like and how it will work, but as a concept it is vital for a number of reasons.

5 years ago, PASA was one of the few voices advocating a virtual aggregation solution to what we saw as information asymmetry in pension savings.

Members find it very difficult to see what pension savings they have and when we tell them, we often take a while and drown them in paper and words.

A dashboard will allow members to see all their benefits instantly in one place and because it needs to be easily viewable, will force us to simplify pensions information.

It will also help to link members and missing pots and might even show some consumers that they have savings they hadn't been aware of. The important thing about a dashboard is that it puts pensions into the public consciousness and will do more to nudge than all our considerable efforts so far.

The industry will step up to the plate to create and deliver dashboard and administrators have a key part to play.

For a dashboard to be useful to members, it needs to be accurate and close to real time.

However, we need to ensure that we don't use quality of data as an excuse to delay implementation.

DC pots will be a natural priority, but given the current proportion of consumers with DB benefits, to get the full advantage of dashboard, DB must be included as soon as practicable.

DB data is known to be less robust, especially for deferred members.

The current focus of cleansing by schemes tends to be on common data, which is important for identifying members, but conditional data will make the difference to the accuracy of the valuation information presented on the dashboard. We therefore need to get DB data sufficiently reliable and for many schemes, this will require a sensible programme of data quality improvement.

There will be costs associated with data cleaning and setting up interfaces.

In reality, cleansing costs should not be greater than would be needed for good management of records over time, but incurred earlier. Standard data specifications and interfaces will need to be built and maintained.

Security of data will be more important than ever. If the dashboard succeeds in increasing member engagement, we could see an increase in transfer activity as individuals seek to consolidate their pots.

This will increase demand for resources, greater automation and faster processing.

The industry should consider creative ways to cost and fund this work, especially for legacy schemes.

Because of cost, some schemes may be reluctant to participate in providing dashboard information, but that would really be a disservice to members and could result on compulsion down the line.

Administrators have an opportunity to raise these challenge with trustees. Start now and we will get there in time.

Written by Margaret Snowdon OBE, Chairman of PASA.

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Pension Funds
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BlackRock completes final close for Renewable Income Europe Fund

The final close has exceeded the fund's original target of €500 million, which it says reflects strong investor demand for long-term income from the renewable power asset class.

Since Renewable Income Europe's first close in February 2016, it has invested approximately a quarter of client commitments in nine wind and solar projects across the UK and Ireland.

The fund's investment team aims to build a diversified portfolio of European wind and solar projects and sees the majority of opportunities for the fund coming from Western Europe.

Rory O'Connor, head of European Renewables Investment for BlackRock Real Assets and manager of the fund, said: "We are very pleased with the final close for the fund. Since 2012 BlackRock has invested in 80 wind and solar projects globally, and manages over $2.5 billion of equity assets in the renewable power sector."

BlackRock says institutional investors, including pensions schemes, struggle to generate sufficient return in the low growth and low rate environment, and many are turning to real assets to meet long-dated liabilities.

According to its 2016 'Rebalancing Survey', 60% of European investors intend to increase exposure to real assets.

Patrick Liedtke, head of BlackRock's Financial Institutions Group for EMEA added: "In an increasingly volatile market, real asset investments are ideally suited to institutions that have a long-time horizon, and are looking for income-producing assets with inflation-protection and low correlations.

"Renewable power provides further portfolio diversification by providing varying local drivers of return, such as those derived by wind and solar resource."

First published 11.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
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Government inquiry to investigate pensions

Following a report on the collapse of BHS and its pension fund (PFI, 29 July), MPs are widening their inquiry to all defined benefit schemes.

The Work and Pensions Committee will look at whether the Pensions Regulator should be given extra powers.

Lesley Titcomb, the chief executive of the Pensions Regulator, will be called to give evidence.

She will be asked to explain whether she could have used her existing powers to block the sale of BHS, having previously told MPs that she learnt about the sale of BHS through the newspapers.

Sir Phillip Green sold BHS to Dominic Chappell with a "gigantic" black hole in its pension fund, according to the report, which led to 20,000 BHS pensioners facing a lower income in retirement.

"The lessons of BHS must be learnt," said Frank Field MP, the chair of the Work and Pensions Committee.

"This may mean strengthening the powers and resolve of the Pensions Regulator to act early, quickly and firmly, with those who seek to avoid their pension responsibilities.

"It is important, however, that businesses that are run reputably and responsibly are not put under undue restriction."

The inquiry into defined benefit pensions will also look at other companies with big deficits in their pension schemes, such as Tata Steel and BT.

A recent funding update found the BT pension scheme had a current deficit of £9.9bn, one of the largest of any British business.

The inquiry will examine the adequacy of the Regulator's powers, the level of its resource, the skills of its staff, and whether it should be more proactive

The Pensions Regulator has also been criticised for having too light a touch in relation to master trust schemes, involving auto-enrolment pensions.

First published 11.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Congratulations. Your inheritance is waiting for you.

This morning, as I do most mornings, I picked up the discarded, now defunct scratch cards littering my front yard. Remnants of broken dreams, maybe even retirement dreams of the customers of the SPAR next door.

At a pensions conference some years ago there was a presentation on how people in different countries expected to fund their retirement.

Apparently, in the US the failsafe fall-back is entrepreneurship. Somehow, as if by magic on reaching retirement and the last pay check, never having run or operated a business previously, many Americans believe they will start a business that will fulfil their retirement needs.

In Europe, and at that time I'm sure the UK was still in Europe, the hope is that an inheritance from a distant wealthy relative will miraculously materialise at just the right moment to fund any retirement savings shortfall.

Australians are more straightforward; despite the overwhelming low probability, there is a belief that a lottery win will drop at just the right time.

Whilst I can't vouch for the veracity of the research, the proposition is intriguing: that luck not pension planning will prevail.

Maybe the Australian example is largely correct. After a lifetime of substantial compulsory employer contributions with no requirement for employee contribution, the tax-free cash lump sum available on turning 60 may feel like a lottery win.

Yet it's the European preference I find most insightful, an unexpected inheritance.

Pensions clearly have an image problem. What if we rebranded them as your future inheritance?

Could this elicit different attitude and behaviours?

What would you do to protect your inheritance? If there was something you could do to increase it, would you? Would you take an active interest in where it was invested?

Imagine a new starter at your company. Rather than being given the pension scheme booklet on Day 1, they were given the details of their future inheritance and all the things they can do to protect it and grow it.

Annual pension benefit statements could become an inheritance countdown statement. The possibilities are endless. The bottom line is that language matters. If you want to connect with your members you need to make the message meaningful to them.

Maybe if I take this thought next door to the SPAR there will be less loser litter tomorrow.

Peter Nicholas, Managing Director & CEO, AHC.

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Pension Funds
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ICI pension fund first to try new risk assessment technology

ICI pension fund and Invensys pension scheme have both used LCP LifeAnalytics, the latest technology from LCP, to understand the longevity risk they are running.

LCP developed the technology in response to the fact it found that most pension schemes do not quantify their longevity risk in the same sophisticated way they do with their investment risks.

It says more schemes are now de-risking their investment strategies and longevity risk is increasingly dominating for those schemes.

LifeAnalytics helps to fill this gap in pension schemes' risk monitoring frameworks by allowing schemes to quantify the types of longevity risk they face and be confident they are making good risk reduction decisions across all the risks they are running.

Andy Smith, CEO of the £5bn Invensys pension scheme, said: "LCP LifeAnalytics provided us with a way of measuring longevity risk that for the first time allowed us to analyse all our risks together."

The ICI Pension Fund uses the longevity risk output from LCP LifeAnalytics alongside LCP's real-time funding and investment tool, LCP Visualise, as part of its risk management platform.

Heath Mottram, CEO of the ICI pension fund, said: "LCP's technology platform enables us to identify which de-risking actions offer the best value-for-money, including our recent buy-ins with Scottish Widows and Legal & General."

Michelle Wright, led the development of LCP LifeAnalytics for LCPs: "Considering longevity and investment risks in a consistent framework allows pension scheme trustees and sponsors to see more easily which de-risking actions offer them the best 'bang for their buck'."

LCP has this week also launched a new interactive site which offers the opportunity for pension schemes to get a feel for what longevity risk might look like in their scheme by answering three simple questions.

First published 04.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
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New DC code of practice in force

The code, which came into use on 28 July, sets out the standards that pension trustees need to meet to comply with legislation.

It applies to all schemes offering money purchase benefits.

TPR intends the new code to be accessed primarily online and has updated its website the reflect the code's structure.

There are six sections in the code: The trustee board, scheme management skills, administration, investment governance, value for members, and, communicating and reporting.

TPR says revising the code is a response to feedback from the pensions industry to shorten and simplify it, focusing more on legislative requirements.

Executive director for regulatory policy at TPR, Andrew Warwick- Thompson, said: "Millions of people are being auto-enrolled into DC pensions, so it's essential that schemes are being managed to a high standard."

"The new code clearly sets out our expectations of trustees and what is required of them to comply with legislation, including the most recent changes in law."

The new code is being published in a dynamic and user-friendly way, Warwick-Thompson said, giving users the ability to navigate directly from the code to relevant legislation and companion guidance online.

TPR has produced a supporting guide for each section of the code, providing detail on how trustees can meet those standards in practice.

It has also produced a tool to help trustees to assess their scheme against the standards in the code, so that they can identify areas requiring improvement.

The Pensions Administration Standards Association (PASA) welcomed the new code.

Sara Cook, PASA director, said: "We are pleased TPR has again emphasised that good administration plays an important part in supporting good member outcomes and recommends Trustees question their administrators on whether they have accreditation, such as that offered by PASA."

First published 04.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Record high pension freedom payments

The latest figures show the total value of payments to more than £6billion across 772,000 payments since the launch of the pension freedoms in April 2015.

People accessing their pensions are also using the government's free pension's guidance service, Pension Wise, which has had over 2.7 million visits to the website and nearly 75,000 appointments to date.

Pension Wise was set up to give consumers information to make informed decisions about their pensions.

Economic secretary to the Treasury, Simon Kirby, said: "It's only right that people should have a choice over what they do with their money and today's figures show that pension freedoms continue to be a popular choice."

"Our pension reforms have already given hundreds of thousands of people access and responsibility over their hard-earned savings and we will continue to make sure that the pension freedoms work well for everyone."

The government has also announced plans to protect consumers by capping early exit fees, allowing earlier access to Pension Wise guidance, and working with industry to introduce a pensions dashboard.

It will extend the freedoms even further, giving millions more people the ability to sell income from their annuities from April 2017, subject to agreement from their annuity provider.

While supportive of the pension freedoms, global insurance and investment specialist Aviva said its own research highlights the need for vigilance to make the long-term interests of savers are protected.

The Real Retirement Report, published earlier this week, said although awareness of new freedoms is "riding high", a relatively large group of people expect to borrow money during retirement.

"Money is tight for many and accelerated use of the pension freedoms could exacerbate the needs to borrow," the report said.

First published 04.08.2016

Lindsay.sharman@wilmingtonplc.com

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Pension Funds
Insider

Legal & General to make longevity insurance mainstream

Club Vita, along with L&G, is launching VitaHedge - a service that automatically delivers tailored indicative pricing to schemes supporting Club Vita.

Douglas Anderson, founder of Club Vita, said there are good reasons to anticipate an upswing in longevity management deals: "With negative real yields on UK gilts, the impact of longevity risk – i.e. the cost of continuing to pay pensions when people live longer than expected - has risen by 50 per cent."

"This is in the context of the risk of yields staying low or getting lower increasing following the Brexit vote and comes at a time when schemes are maturing and reducing their exposure to investment risk."

Longevity risk now represents a larger slice of the risk pie than ever before, he added, which means it is inevitable that longevity risk management will move higher up the agenda for those running DB schemes.

Club Vita has invested heavily in technology to efficiently deliver detailed statistical analysis to each scheme to support their risk management programmes, such as benchmarking survival patterns against peers.

Anderson said: "VitaHedge is a natural extension of Club Vita's existing data services - until recently, insurers have only been confident to offer attractive prices to the biggest schemes, but that's now starting to change.

"We are proud to be opening up the benefits of longevity hedging to a wider audience of pension funds.

Phill Beach, head of core business for the L&G Pension Risk Transfer team, said the company has a history of delivery new and innovative pension risk transfer solution to pensions schemes.

He said: "Longevity insurance has an important role to play in pension de-risking journey plans and has historically been utilised by only the largest pension schemes and insurance companies in the UK.

"We believe VitaHedge will help smaller and medium sized pension scheme overcome the barriers they have historically faced."

First published 28.07.2016

Lindsay.sharman@wilmingtonplc.com

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