1. Pensions agenda
Spring clean your scheme
Date: April 2013 Advisers: Eversheds LLP
1 Pensions Regulator’s new objective – In the 2013 Budget the Chancellor announced
that the Pensions Regulator will be given a new objective. The precise wording is still to
be confirmed but the Chancellor said that, in future, the Regulator would have to have
regard to the “growth prospects of employers”. Read more.
Action: Employers and trustees should consider how this may impact their
scheme’s funding arrangements and whether they should factor the new
objective into current negotiations.
2 Abolition of DB contracting-out – The Chancellor also confirmed in his Budget speech
that the introduction of the single-tier state pension (and consequently the abolition
of DB contracting-out) will be brought forward to April 2016. Private sector employers
will be able to amend their scheme to offset the increase in their national insurance
contributions resulting from this. Read more.
Action: Employers should assess how the abolition of DB contracting-out
will impact them and consider what, if any, changes they plan to make to
their scheme.
3 Downgrading of RPI – In a surprise move, the UK Statistics Authority has announced
that the Retail Prices Index (RPI) will no longer be designated as a national statistic, on
the basis that it does not meet international standards. This has created uncertainty over
whether RPI remains a suitable index for determining pension increases and revaluation
under DB schemes.
Action: Trustees and scheme sponsors should take advice on how the
downgrading of RPI impacts their scheme.
4 DC Governance – Auto-enrolment means that the governance of DC schemes is in
the spotlight now more than ever. The Pensions Regulator has recently issued a draft
Code of Practice and regulatory guidance on DC governance, which includes 31 quality
features that it would expect to see in a good quality DC scheme.
Action: Trustees of DC schemes and pension providers should review their
schemes to ensure that they meet the requirements set out in the Regulator’s
new Code of Practice and regulatory guidance.
5 New Fair Deal guidance – HM Treasury is expected to finalise its new Fair Deal
guidance shortly. If the new guidance follows the draft issued last November, private
sector employers will no longer be able to provide broadly comparable schemes to
newly transferred staff, who will instead have to be given continued access to the
relevant public service scheme.
Action: Private sector contractors and public sector bodies covered by Fair
Deal need to consider how the new guidance will impact future outsourcings
and re-tenders. Read more.
