Pension news
AE compliance and enforcement THE PENSIONS Regulator’s (TPR’s) most recent Compliance and enforcement quarterly bulletin (http://bit.ly/2snWjdx) reveals that to 31 March 2017 over 500,000 employers have met their duties and nearly eight million of their staff are now saving for their retirement. However, the bulletin also reveals TPR’s increasing compliance activities as shown in the table below. TPR has the power under section 89 of the Pensions Act 2004 to publish prescribed information including details of employers that are non-compliant and those that have failed to pay an escalating penalty notice and are now subject to a court order (http://bit.ly/2qEAzsf).
Longevity and pension scheme liabilities
Simplifying the AE payroll process for employers The report shows that 60% of employers continue to assume an annual improvement of 1.25% in mortality over the long-term in their corporate accounts, with 28% using a rate of 1.5%, and 11% assuming 1.75% or higher. STANDARD LIFE has fully integrated its automatic enrolment (AE) solution with Sage to simplify and reduce the administrative burden for employers that are setting up and running workplace pensions for employees. Employers that use Sage 50 payroll software will be able to send employee and pension contribution data securely, directly, and in one click to Standard Life. In addition, Standard Life is offering Sage 50 clients a 50% discount if they set up a new workplace pension before 31 August 2017. This reduced price will apply for the entire lifetime of the Standard Life pension scheme. At the same time, Sage is offering a 50% discount on the set-up fee of a new pensions module to these customers as well as to employers not currently with Sage who are setting up a Standard Life workplace pension. This offer is available until 31 August 2017. Alan Ritchie, head of employer and trustee proposition at Standard Life, said: “By integrating with Sage’s leading payroll technology, we continue to support businesses to ensure their auto enrolment experience is a success.” Dan Docherty, director product marketing, Sage, commented: “Teaming up with Standard Life means we are able to support even more businesses in eliminating what can be an administrative burden; helping owners free up time that they can use to build their businesses instead.” ANALYSIS BY Mercer shows that the stalling of mortality improvements in recent years is now leading employers to revise downwards their estimates of employee lifespans, shaving £2.5 billion off FTSE 350 pension scheme liabilities. In their 2016 year-end accounts, employers are typically assuming a 65-year-old woman will live to 89.5 years and a 65-year-old man to 87.5. These figures are around three weeks lower than when they reported 2015 year-end figures. In isolation, this reduction trimmed £3 million off every billion pounds of liabilities shown in the UK’s company accounts. According to Glyn Bradley, principal in Mercer’s innovation, policy and research team “While, in the short-term, life expectancy increases have slowed, medical research, application of past breakthroughs, innovative use of technology and potential for lifestyle improvements all mean that lifespans will continue to increase.”
Compliance activity
This period To March 2017
46
257
Information notices issued
227
284
Inspections
2
4
Warrant issued
8,955
40,206
Compliance notices issued
487
1,592
Unpaid contributions notices
4,673
14,502
Fixed penalty notices
PLSA’s Made Simple Guides THE PENSIONS and Lifetime Savings Association (PLSA) has published the following two new Made Simple Guides. ● Good quality data for local authorities (http://bit. ly/2srSox5) – This guide, sponsored by Equiniti, provides people involved in running local authority pension funds with an insight into the drivers for good quality data – both the benefits of having it and the risks of not having it – and helps define what ‘good’ really looks like for each scheme. Ric Williams, chief executive officer for EQ Paymaster, Equiniti, said: “Good quality data matters whatever your priorities. This is truer now than ever before as the importance of a scheme’s data quality has never been higher.” ● Factor investing (http://bit.ly/2pTGtmG) – This guide, sponsored by Robeco, explains how factor investing – a third way between passive, market index-following strategies and traditional active management – can help pension funds improve the risk-return profile of their portfolios. Peter Walsh, head of Robeco UK, said: “The topic of factor investing is receiving increased attention as trustees focus on transparency and value for money. We are convinced that an increased understanding of factor-based investing is vital to help make the right decisions.” until 31 August 2017.
Older people missing the chance to double pensions savings OVER THE past year NOW: Pensions has found that people approaching retirement are three times more likely to opt out of automatic enrolment (AE) than their younger counterparts. Amongst NOW: Pensions’ members the opt-out rate for those over age 55 is 22%, compared to only 8% for people under this age. The rate for ages 20–40 is even lower at 7%. Adrian Boulding, NOW: Pensions policy director, believes pension providers have failed to communicate with older people effectively about the benefits of AE. He says that people who opt out are “effectively throwing money away by missing out on their employer’s contribution to their pension, and the government’s contribution in the form of tax relief”.
| Professional in Payroll, Pensions and Reward | July/August 2017 | Issue 32 42
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