7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days:

EIOPA publishes report on market developments in cross-border IORPs
HMRC issues latest Countdown Bulletin
NEST Corporation and NEST Scheme annual reports and accounts 2013/14
PO publishes its annual report and accounts
PPF publish revised statement of investment principles
TPR issues quick guides to boost public service pension standards
TPR publishes annual report and accounts for 2013/14

EIOPA publishes report on market developments in cross-border IORPs

On 10 July 2014, EIOPA published the seventh report in a series on Market Developments. It shows the evolution in the number of cross-border pension arrangements, as formally notified to Member States between June 2012 and June 2013.

The results of the 2013 survey show that during this period the number of cross-border schemes dropped to 82, from 84 in last year’s report. For comparison, the 2012 report showed no change in the number of schemes. The 2011 and 2010 reports showed increases of 8% and 3% respectively.

HMRC issues latest Countdown Bulletin

DB contracting out will be abolished from 6 April 2016 as a consequence of the introduction of the new single tier state pension on the same date. For further details please see our Alert.

HMRC is issuing “Countdown Bulletins” to assist companies to prepare for the removal of contracting-out. This latest issue was published on 11 July 2014. It includes information on:

the DWP stakeholder forum
HMRC’s scheme reconciliation service (which assists trustees and administrators to reconcile their non active member records with those of HMRC).

NEST Corporation and NEST Scheme annual reports and accounts 2013/14

On 10 July 2014, NEST Corporation published its annual report and accountsfor 2013/14, along with the annual report and accounts for the NEST pension scheme. The documents disclosed a number of key statistics.

As at the end of March 2014 NEST:

had over 1 million members. The average opt out rate was 8 per cent
had 104 million assets under management, largely invested in the default funds (NEST Retirement Date Funds). Over 99 per cent of members are invested in those funds
was working with just under 4,700 employers.

As at the end of June 2014 NEST:

had approximately 1.3 million members
had over £160 million assets under management
was working with over 7,900 employers.

PO publishes its annual report and accounts

On 10 July 2014, the PO published its 2013/14 annual report and accounts. The report includes information on its operational and financial performance as well as case studies with examples of investigations carried out during the year. Key points include:

there was a 10% increase in the number of enquiries received
one in three cases decided by an ombudsman was upheld in full or part
the PO received about 50 complaints concerning transfers blocked due to alleged pension liberation (with a group about the same receiving scheme). Decisions are expected in summer 2014
the PO completed 1115 investigations, compared to 954 in 2012/13.

PPF publish revised statement of investment principles

On 10 July 2014, the PPF published its revised Statement of Investment Principles. The changes include:

revisions to the strategic allocations of the Permitted Asset Classes
introduction of a Hybrid asset strategy

The PPF holds a conservative investment approach and has recently evolved the risk budget with the addition of illiquidity as a separate risk factor. The Statement of Investment Principles reflect the PPF’s commitment to delivering its 2030 funding target through prudent and effective management of the balance sheet.

Within the revisions to the current spread of Permitted Asset Classes, the PPF has introduced a specific Hybrid asset class. The strategy allocation involves increased allocation to illiquid assets with hedging characteristics. Building Alternative, Hybrid and LDI assets and reducing assets across Equities and Government Bonds will enable the PPF to better generate steady cash flows in the long term. The PPF aims to move to the strategic allocation within the next three years.

TPR issues quick guides to boost public service pension standards

On 8 July 2014, TPR published two new “quick guides” to help support those who are going to be involved in governing and administering public service pension schemes.

Pension boards, required under the Public Service Pensions Act 2013, are expected to be in place for public service pension schemes by April next year. The boards are intended to help ensure schemes comply with the governance and administration requirements.

TPR’s executive director for DC and public service pension schemes, Andrew Warwick-Thompson said:

“The proper running of public service schemes, used by 22,000 employers and with 12 million members, is vitally important as good governance and administration are essential to ensure that retirement savers receive the right benefits at the right time. They should also contribute to the efficiency and cost-effectiveness of public service schemes.

It is therefore crucial that newly appointed board members get to grips with their duties and understand how a board should function, which is why we’re publishing these guides now.

We want to enable a smooth set-up and running of the boards. Our guides should be useful introductory tools for them in their role in helping to ensure that all public service schemes are well run.”

TPR publishes annual report and accounts for 2013/14

TPR has published its annual report and accounts for 2013/14.

The document outlines TPR’s work to help more than 10,500 employers register for automatic enrolment, protect members of DB and DC schemes by driving up standards and step up the fight against pension scams.

For the first time, TPR has also published a short overview of the last financial year, highlighting key activities and achievements.

TPR’s chair Mark Boyle said: “The last year has seen a number of significant milestones. Automatic enrolment is now having a real impact with many millions more people saving into a pension for the first time. Most will be saving into DC schemes and we are focused on working with Government and the industry to drive up DC standards to improve outcomes for retirement savers.

We have also redefined our approach to DB regulation by consulting on a new code of practice that explicitly balances an employer’s sustainable growth with TPR’s other statutory objectives.

In recent months, there have been a number of major announcements that will further reshape the pensions landscape. In order to achieve the priorities set out in our recent Corporate Plan, it is vital that we remain an agile organisation that is able to adapt to the challenges ahead.”