Pension news
Over-65s boost pensions by working METLIFE’S ANALYSIS of pensioners’ income statistics reveals nearly one in seven over-65s are boosting their retirement income by working, earning around £296 in addition per week (annual pay of nearly £15,400). The number of over-65s working has increased from just 8% of the pensioner population in the past ten years to 13% – the equivalent of 1.1 million people. Pensioner couples are three times more likely to be boosting retirement income by working – around 21% of couples have earnings from working compared with just 6% of single pensioners. Around 72% of all pensioners have private or company pensions compared with 66% a decade ago. And average pensioner incomes after tax and housing costs are just 7% below average incomes for working households. generation of experienced industry advisors are going to be able to solve these issues before they retire themselves. … While a recent survey from the Pensions Management Institute showed that the fall in the number of staff working in DB is not at a critical stage just yet, the trend is most certainly downward, and we would urge the industry to act before it’s too late.” DB administration skills gap TRAFALGAR HOUSE, the pensions administration specialist, has called on the industry to do what it takes to avoid a defined benefits (DB) skills gap arising in the future and its resulting impact on providers’ ability to competently manage DB schemes. Garry Wake, managing director of Trafalgar House, commented: “The pensions industry in the UK has two parallels. We have the [defined contribution] (DC) sector, with auto-enrolment and pensions freedoms putting DC firmly in the spotlight … We then have the DB sector which is effectively closed for business, with falling numbers of members and the increasing de-risking of schemes. It’s no surprise that any fresh new talent coming into the industry will not only be drawn to DC, but that companies are more likely to usher them into that part of their business with a view of future investment. “However, there are many DB schemes with a long tail of liabilities which still require strategic support for their de-risking path and deficit recovery, and it seems increasingly unlikely that the current
PPF reports record deficits THE PENSION Protection Fund (PPF) estimates that aggregate deficits in defined benefit schemes totalled a record £384 billion at the end of June 2016, up from £295 billion a month earlier. The highest deficit previously recorded was £368 billion in January 2015. These figures estimate the cost of paying insurance companies to secure the reduced level of benefits that scheme members can receive through PPF compensation if the scheme’s sponsoring employer becomes insolvent. Graham McLean, head of pension scheme funding at Willis Towers Watson, said: “The deficits that employers need to pay off are measured differently – they don’t assume that benefits will be cut back to PPF levels, but they typically use less cautious assumptions. “On any measure, though, the market reaction to Brexit has kicked another big hole in pension schemes’ funding levels. Assets have grown – at least when measured in sterling – but not quickly enough to keep pace with the increased cost of paying promised benefits in a world where interest rates and expected returns on assets are lower.” New AE tool WORKPLACE PENSION provider Aviva has launched a new tool for business advisers and accountants to help them create simple but bespoke cost reports for their clients. The aim is for a business adviser to be able to quickly and effectively answer the number one question most employers will have – ‘How much is auto-enrolment going to cost me?’ The reports, which are called ‘Auto-enrolment Costs Explained’, require just a small amount of information. A business adviser will only need details of their own charges and the client’s workforce and within minutes will receive a link to the report. Andy Beswick, managing director of business solutions at Aviva, said: “Advisers can quickly and easily get a cost breakdown for their client which they can then share. It will give the employer and the adviser or accountant a clear indication of costs before they move on to the quote and apply system. “We have been working hard to make auto-enrolment journey as smooth as it can be. We will work with businesses of all sizes, including micro employers, to help them fulfil their workplace pension obligations.” Small businesses not ready for AE ACCORDING TO new research from Geniac, the business platform for startups and small- to medium-size enterprises (SMEs), one in two of startups and small businesses say they are not confident their business will be ready to offer the automatic enrolment pension scheme within the Government’s deadline. Failing to tackle automatic enrolment could compound the issue of small businesses being hit with unexpected costs. Nearly two-thirds (64%) of small business owners say that unexpected costs have caused serious business issues including having to let staff go to free up funds (7%). Mike Galvin, co-founder of Geniac, comments, “Thousands of business owners are simply in the dark over how to handle this major administrative change, or are putting off sorting it because of the time involved. To avoid unexpected penalties, business owners should seek professional advice to get ready by the deadline.”
| Professional in Payroll, Pensions and Reward | September 2016 | Issue 23 40
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