Pension news
Crackdown on poor record-keeping AS PART of tightening its regulatory grip to drive up standards of governance and administration and deliver better outcomes for pension savers, The Pensions Regulator (TPR) is asking the trustee boards of 400 pension schemes to conduct a data review within six months. These schemes are believed to have failed to review their data in the last three years. The trustees will be required to report the proportion of their members for whom they hold accurate common and scheme-specific data. Those failing to do so may face action, which could include an improvement notice about inadequate internal controls. Failure to comply with the notice carries a fine of up to £5,000 for an individual or up to £50,000 in any other case. Without accurate records, schemes cannot process financial transactions promptly and accurately, communicate with their members, check employers are correctly paying contributions, have confidence in the accuracy of scheme valuations or assess whether savers are getting value for money. Accurate record-keeping will also be vital for the pensions dashboards so that savers can see exactly what pension savings they have and consider whether they need to put more away for later life. A total of 1,200 schemes are being contacted to remind them to carry out data reviews annually. Trustees that discover that the data they hold is of poor quality will be expected to draw up improvement plans to rectify the problem. David Fairs, TPR’s executive director of regulatory policy, analysis and advice, said: “Accurate record-keeping is vital to good governance and administration – without it trustees cannot ensure that savers will get accurate information or receive the pensions they are entitled to. “Requiring trustees to carry out reviews will force them to look closely at their data and administration and take appropriate action to bring their systems up to scratch.”
New rules for trustees NEW RULES came into force on 1 October requiring scheme trustees to outline their approach to engagement and voting of their shares in investee companies, as well as including environmental, social and governance (ESG) and climate change considerations in their investment decision making. The rules state that trustees of defined benefit and defined contribution occupational pension schemes with more than 100 members must have set out in their statement of investment principles (SIP) how they take account of financially material factors, including ESG factors and climate change. Caroline Escott, of the Pensions and Lifetime Savings Association (PLSA), said: “Trustees must continue to work with their advisers and managers both to implement ESG and stewardship approaches across their portfolio, and to consider how best to talk about these issues with scheme members. This will be important if they are to meet the next set of 2020 regulatory deadlines, as well as those coming down the track in 2021.” The PLSA’s ESG and stewardship guidance, and More light, less heat guidelines can be found here: http://bit.ly/33CsfKd, and http://bit.ly/2IW2hJQ, respectively.
Pension freedoms impact DATA RELEASED in September by the Financial Conduct Authority ( Retirement income market data 2018/19 – http:// bit.ly/2qnXCtV) reveals that: ● ● more than 645,000 pension plans were accessed to buy an annuity, move into drawdown or take a first cash withdrawal ● ● over 350,000 pension pots were fully withdrawn at the first time of access; 90% of which were less than £30,000 in value ● ● 48% of plans were accessed without regulated advice or guidance being taken by the plan holder. Mark Futcher, head of workplace wealth at Barnett Waddingham, commented: “With half of pension pots being accessed without regulated advice or guidance being taken by the plan holder, people are putting their futures at risk. Making the wrong decision at retirement can easily waste ten years’ worth of contributions. “Companies pay a lot into employees’ pensions over the years so it’s puzzling why they would want to see them waste it on a stab in the dark at retirement time; it is their responsibility to guide their employees, communicating and clarifying the options available to members, especially at the most crucial stages.”
Retirement confidence is on the rise RESEARCH CONDUCTED by Aegon reveals that people in the UK are feeling slightly more confident about their ability to retire comfortably, than they did two years ago. However, while retirement confidence appears to be improving, many remain in the dark when it comes to their pension savings and arrangements for funding their retirement. The Retirement confidence survey reveals: l 10% admit that they don’t have any pension savings l 36% have never estimated their income needs for retirement l 25% of those with pension savings don’t know how much they have. Steven Cameron, pensions director at Aegon, comments: “While auto-enrolment means millions of employees are saving more for retirement, that doesn’t mean they’re on target for the retirement they aspire to or to maintain their pre-retirement standard of living. “Whatever your age or circumstances, finding out more about your pension funds and prospects can only be a good thing.”
| Professional in Payroll, Pensions and Reward | November 2019 | Issue 55 38
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