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:

• Summer Budget
• Pensioner bonds
• Ombudsman determination
• Nortel judgment
• TPR publishes scheme funding report 
• EIOPA – stress test
• Joint Committee report on securitisation

Summer Budget

The Chancellor of the Exchequer, George Osborne, has announced that there will be a Summer Budget on Wednesday 8 July 2015. Whether there will be any pensions proposals to add to those already put forward in this year’s Budget remains to be seen.

Pensioner bonds

HMT has reported that more than a million older savers have bought over £13 billion of the Government’s 65+ pensioner bonds, which came off sale on 15 May. The Government has stated that these figures “means that the bonds have been the biggest selling retail financial product in Britain’s modern history”.

Ombudsman determination

The PO has published his determination on 15 May 2015 in a case concerning the lump sum paid to a firefighter on his retirement, upholding a complaint against GAD. The case related to the commutation factors used, and whether these factors should have been reviewed earlier than they were. The PO upheld the complaint, concluding that “GAD failed to identify its continuing responsibility to calculate appropriate factors”, following a change in the relationship between GAD and other Government departments.

The PO directed GAD to assess what the commutation factors would have been if reviews had taken place, to assist in the recalculation of the cash sum, and to pay interest on any additional cash sum, from the complainant’s retirement date.

As this complaint is one of a number brought by members of the scheme, this decision could have relevance to many retired firefighters and police officers.

GAD has issued a technical bulletin on the subject.

Nortel judgment

Judges in the US and Canada in the joint trial on the allocation of assets in the long running Nortel case have ruled in favour of the Nortel Networks UK Pensions Plan trustees and the PPF. Their ruling was that Nortel’s assets of $7bn (£4.5bn) should be shared pro rata between its creditors, with the UK interests placed on an equal footing with other Nortel creditors worldwide. In theory, creditors stand to receive up to 71% of their claims.

In the first case of its kind, the judges agreed this achieved a “fair and equitable” result.

A full report of the case will follow.

TPR publishes scheme funding report

TPR has published its latest scheme funding analysis of valuations and recovery plans. The analysis covers “Tranche 8” schemes, with triennial valuation dates between 22 September 2012 and 21 September 2013.

EIOPA – stress test

EIOPA has launched a “pensions stress test” and quantitative assessment on solvency for Institutions for Occupational Retirement Provision (IORPs). The stress test, which covers both DB and DC, will assess the resilience of IORPs and their pension schemes to adverse market scenarios and a longevity scenario. The stress test is designed to provide insight and raise awareness of the occupational pensions’ sector risks and vulnerabilities, whilst the quantitative assessment aims to gather data on potential uses of the holistic balance sheet and to support advice to the European Commission on EU solvency rules for IORPs.

Joint Committee report on securitisation

On 12 May 2015, the Joint Committee of the three European Supervisory Authorities (the European Banking Authority, the European Securities and Markets Authority and EIOPA) published a report detailing its findings and recommendations regarding the disclosure requirements and obligations relating to due diligence, supervisory reporting and retention rules in existing EU law on Structured Finance Instruments. The recommendations constitute the Joint Committee’s response to the European Commission’s recent consultation on securitisation.

The report aims to establish whether investors are effectively protected and whether the supervision framework is appropriate to support the redevelopment of the EU securitisation markets. It includes recommendations to harmonise due diligence requirements across the EU, and to review the use of different definitions and key terms across EU legislative texts.