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

• FCA publishes new Financial Services Register
• NAPF publishes an Interim Report in the Understanding Retirement research series
• NEST seeks enhanced diversification through emerging market bond fund mandate
• TPR publishes Docklands Light Railway Pension Scheme report
• Pollet (Pensions Ombudsman) – 21 July 2015

FCA publishes new Financial Services Register

On 7 September 2015, the FCA published a new Financial Services Register, which contains information on firms, individuals and other bodies (including investment exchanges) that are, or have been, regulated by the PRA and/or the FCA.

The new Register is designed to be more clear and easier to search, and contains ‘help text’ to explain financial, technical and regulatory terms.

For the first time, firms without the required authorisation – or who are knowingly running a scam – are included in the Register, highlighted in red text and with a warning symbol to encourage people to avoid them.

Consumer credit firms are included in the new Register, but Mutual societies and Regulated Covered Bonds issuers remain in their own separate registers.

NAPF publishes an Interim Report in the Understanding Retirement research series

The NAPF has published a report – “Pension Freedoms: Breaking the deadlock” – in relation to the freedoms introduced from 6 April 2015.

Amongst other things, the survey revealed:

• little appetite for transfers from DB to DC, with only 3 per cent of those with DB benefits expressing a clear desire to move their savings
• that most DC savers (56 per cent) aged 55-70 have yet to make a decision about how they would like to access their retirement savings or are waiting to see how the market develops. Only 17 per cent were planning to access their pension savings under the new freedoms in 2015
• 70 per cent of those who expressed a preference wanted to leave all or some of their savings invested and draw a regular income from their investment, with two-thirds expecting to take drawdown through their existing provider or scheme.
• 48 per cent of respondents wanted to take some or all of their savings as cash
• 24 per cent of respondents still intended to purchase an annuity.

NEST seeks enhanced diversification through emerging market bond fund mandate

NEST has announced its intention to improve its ability to diversify members’ portfolios by procuring an emerging market bond fund mandate, to add to the existing funds that underpin the scheme’s default Retirement Date Funds and some of its alternative fund choices.

NEST is therefore searching for an actively managed pooled emerging market debt fund that blends bonds denominated in both local and hard currencies.

Mark Fawcett, NEST chief investment officer, said: “Emerging market debt is becoming a strategic holding for a growing number of pension schemes. This is in part because emerging market bonds can offer attractive yields in an otherwise low yielding fixed income environment. We think it’s appropriate to have emerging market debt among the growing number of asset classes NEST can call on to deliver better retirement outcomes for our members.”

The deadline for receiving tenders will be in October 2015 with a view to awarding the contract in early 2016.

TPR publishes Docklands Light Railway Pension Scheme report

On 3 September 2015, TPR published details of its funding investigation into the Docklands Light Railway Pension Scheme (the Scheme), in its “section 89 report” setting out the action TPR took. This is the first time a section 89 report has been issued relating to a scheme funding case.

The report highlights how TPR will take action to protect member savings where DB schemes have missed statutory deadlines to provide valuations.

When the trustees of the Scheme and its employer were unable to reach agreement on an actuarial valuation in 2010, TPR initially facilitated discussions between them. The negotiations were however unsuccessful, and TPR reached the view in 2012 that it was appropriate to consider exercising its funding powers. TPR suspended its regulatory action due to further negotiations between the parties, which in the end led to a settlement being reached.

TPR’s chief executive, Lesley Titcomb, said that their “action in this case demonstrates we will work closely with schemes to address non-compliance but also that we have a low tolerance for late actuarial valuations. As late actuarial valuations can create uncertainty and could increase risks to both the scheme and the employer, we will consider whether to use our powers to protect member outcomes and ensure employers meet their obligations.”

Pollet (Pensions Ombudsman) – 21 July 2015

In this case concerning a DC transfer, the PO upheld a complaint against Optimum Capital Limited (OCL) – the trustee/principal employer of the member’s scheme – for not actioning the request within a reasonable period. Mr Pollet had complained that the failure to process his transfer request had caused him financial loss.

The PO considered a change of administrator and problems encountered as a result were not a reasonable excuse for the delays in carrying out a transfer request. OCL was ordered to pay the substantive financial loss suffered by the member, plus a sum for distress and inconvenience.

The PO was not willing to allow the maximum permissible time to effect a transfer (six months from a member’s request). In this case, he considered that one month would have been a reasonable period within which to disinvest Mr Pollet’s holdings and make the transfer.

For more detail, please see our case report.