Clive Pugh’s Post

Please see below our update blog in the Insider on the new DB Funding Regulations. These regulations will affect pension trustees' journey planning as regards scheme funding and investment strategy, though much of the detail is to follow in the Pensions Regulator's new DB Funding Code.

I’m interested to get feedback on this story. Amid all the talk in the regulator’s plan about consolidation, the recognition of the growth and influence of professional trustee firms is (I think) a big development. What should the regulator be looking at in this area? Do these companies have too much influence? Is the member voice being lost? Or are they a vital part of the solution for a maturing DB landscape? What do you think?

Many corporate pension plans saw their funding levels drop in September, according to new data. Factors like falling discount rates and volatile market conditions contributed to the decline, with overall funding ratios dipping across the board. Key highlights: - Majority of corporate pensions experienced a drop in funding - Decline due to falling discount rates and market volatility - Potential for recovery as economic conditions evolve Learn more about the September dip in pension funding, and read Agilis' full take in PLANSPONSOR's recent article: https://lnkd.in/e6j976rJ *Access to article may require an active PLANSPONSOR subscription #CorporatePensions #PensionFunding #RetirementPlans #MarketVolatility

#CaringIsSharing 💚 One of my thematic concerns since 2013 has finally hit the radar of the Pensions Regulator. #CultureFailure is a huge problem in Pensions La La Land. It is the route cause of systemic failures going unchecked for over a decade and the consequences have been catastrophic for ~2.8m SMEs and ~10m Workers who are Most at Risk (MaR) from the biggest proportionate drops in income at retirement. Those who are MaR had an average pension shortfall of ~£200,000 in 2010. By 2022 the figure had jumped to £250,000 and had peaked at around £335,000 during ZIRP years. I am due to review the market again in 2025 as Cohort 1 reach their 15yr Mid Point Values (MPV) but as at the inaugural date of Restitution Day (#RDay 🎃) all Cohorts were trending at ~1x greater outcomes than 6 of the biggest DC Pension Platforms. I read with interest tPR's commitment to working with the FCA on the Value for Money Framework, noting that Cohorts participating in my 3PPS Framework are significantly ahead of 28m Double Defaulters. Trustees who fail to ensure every member has access to Best Use Of Money (BUOM) principles, which essentially focus on the Effectiveness, Efficiency and Relevance of a scheme's Default Strategy meeting unmet needs, will trigger #BlindSpotRisk for 9 in 10 members. The awaiting outcome after just 1 year is a need for Restitution Funding, which will help put the member back into the position they should have been. As at Restitution Day that amount equated roughly to 1.5x current salary, which is ~£60,000 per member. To work out what the accumulated Blind Spot Risk is over the past decade since I served Pension La La Land warnings of financial harm being caused, just multiply Scheme Members x £60,000. The question I have for Pension Trustees and IGC Chairs are why would you not want your members to have £60,000 more in their pension pot? Just Saying 🤷♂️ #BUOM

Clear expectations for the release of capital from defined benefit (DB) superfunds form part of updated guidance released today by The Pensions Regulator (TPR). TPR listened closely to the industry regarding capital release: the position in the updated guidance supports innovation, while retaining protection for scheme members. The DB superfunds guidance now states capital can be released up to twice a year and when meeting a specific trigger and safeguards. https://ow.ly/9Nmr50SKR1O

The DB funding code in 5 minutes… Having been rumbling on for over 6 years, tPR has now released its final draft of the DB funding code. Fear not, with more than 100 pages to pick through, James Willcock, AIA and I have done the hard work for you! Click the link below to remind yourself how we got to this point, a refresher on what this actually means for pension scheme trustees, and how this could impact scheme investments. #pensions #dbfundingcode #fiduciarymanagement #lgim

In case of interest - IOPS has published Working Paper No 42 entitled "Supervision of Pension Funds' Selected Investment Activities". It presents the findings from the recent survey on selected four investment activities by pension funds and corresponding regulatory practices: a) leverage, b) lending, c) trading (including short selling) and d) indirect investments. A total of 32 IOPS Members (representing approximately 40% of the IOPS Governing Members) provided valuable insights and experiences. https://lnkd.in/eRg5TpSD #IOPS #pensions #supervision

Pensions Age have issued a useful article summarising where we currently are with pooling of assets in the LGPS. Jeff Houston from BW gives his expert opinion on progress and some of the key challenges faced: https://lnkd.in/eH7szmqF

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