TPT Retirement Solutions’ Post

Really looking forward to working with our clients on the new requirements. A couple of useful links below for those starting to think about strategy under the new regime. https://lnkd.in/eJ8q4jHt https://lnkd.in/enfmNspx #fiduciarymanagement #ocio #pensions

K3 Advisory have today said there are potentially hundreds of small pension schemes unaware they are within ‘cheque writing distance’ of being able to afford to buyout their scheme liabilities and urged trustees to take action. According to data from the Pension Protection Fund’s 2023 Purple Book, 26% of schemes with fewer than 99 members are estimated to be between 75% and 100% funded on a buyout basis (487 schemes).   Andrea Mendham, Partner and Head of Buy-in to Buyout services commented: “These figures are unlike anything we have seen before in terms of funding positions for small pension schemes – and it provides an opportunity that many could not have foreseen to secure member benefits and take the scheme off the sponsoring company’s balance sheet. However, many of the trustees of these schemes are completely oblivious to how close to being fully funded on buyout they are.” #DBpensions #bulkannuities #buyin #buyout #K3 https://lnkd.in/eAB7_ZdQ

On 29 January 2024, the government finally published the Funding and Investment Regulations that pave the way for a new Funding Code for DB pension schemes, and a new funding regime that will apply to valuations from 22 September 2024. In this blog, David Fairs shares his thoughts on the new regulations https://lnkd.in/eZQZGpyc

DWP hints at a more nuanced approach to VFM - Pension Oldie explains why! https://lnkd.in/efJ9_6Hx To schemes declaring VFM using marked to market valuations, that means high allocations to the preferred private market funds could imperil the VFM of the scheme as a whole.

Anyone charging into the private assets space take heed. Some pertinent excerpts from the attached below: ‘Investing into any new type of asset requires a full understanding of its characteristics – not only risk and expected net return, but its alignment to liabilities.’ ‘Further, decision makers must be fluent in the nuances of illiquid assets as to fees and valuation, which are unlike the public market assets in which DC schemes have typically invested to-date. Our recommendation to DC scheme trustees and sponsoring employers of any DC arrangement, from single employer schemes to master trusts and group personal pensions, is to undertake a full education process ahead of any decision making.’

this Code is already out of date. It needs to be updated to address the rights and responsibilities of pension stewards, as stewards of a dignified future for their promisees, directly, and promisor, indirectly, that will also be a dignified future for all of society, consequently. Which gives us a chance to ponder the word "steward", which means both caring for and temporary, as in "temporary caring for" something for someone else. Pension fiduciaries are stewards in the sense of "caring for". But they are not stewards in the sense of "temporary". A pension promise is forever. A pension has a fiduciary duty to forever. The pension promise is a forever machine. It must be cared for forever.

𝐁𝐏 𝐨𝐟𝐟𝐞𝐫𝐬 𝐨𝐧𝐞-𝐨𝐟𝐟 𝐂𝐨𝐬𝐭-𝐨𝐟-𝐋𝐢𝐯𝐢𝐧𝐠 𝐆𝐫𝐚𝐧𝐭 𝐭𝐨 𝐞𝐥𝐢𝐠𝐢𝐛𝐥𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧𝐞𝐫𝐬   To anyone not directly affected by the BP Pensions crisis, this might sound generous.   Current BP employees on a different pension scheme might believe the internal hype that this generous offer has ‘𝐬𝐨𝐥𝐯𝐞𝐝 𝐭𝐡𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧𝐬 𝐢𝐬𝐬𝐮𝐞’.   𝐇𝐎𝐖𝐄𝐕𝐄𝐑   As MP Alistair Carmichael recently reminded the pensions minister during a debate in Westminster Hall:   “𝘈 𝘱𝘦𝘯𝘴𝘪𝘰𝘯 𝘪𝘴 𝘪𝘯 𝘦𝘧𝘧𝘦𝘤𝘵 𝘢 𝘮𝘢𝘵𝘵𝘦𝘳 𝘰𝘧 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵 𝘣𝘦𝘵𝘸𝘦𝘦𝘯 𝘢𝘯 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘳 𝘢𝘯𝘥 𝘢𝘯 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦. 𝘐𝘵 𝘪𝘴, 𝘪𝘯 𝘰𝘵𝘩𝘦𝘳 𝘸𝘰𝘳𝘥𝘴, 𝘴𝘪𝘮𝘱𝘭𝘺 𝘴𝘢𝘭𝘢𝘳𝘺 𝘱𝘢𝘪𝘥 𝘢𝘵 𝘢 𝘭𝘢𝘵𝘦𝘳 𝘴𝘵𝘢𝘨𝘦 𝘪𝘯 𝘵𝘩𝘦 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦’𝘴 𝘭𝘪𝘧𝘦.”   When referring to the response he finally received from BP on the matter, Carmichael said:   “𝘉𝘗’𝘴 𝘥𝘦𝘧𝘦𝘯𝘤𝘦 𝘪𝘴 𝘲𝘶𝘪𝘵𝘦 𝘳𝘦𝘷𝘦𝘢𝘭𝘪𝘯𝘨. 𝘐𝘵 𝘩𝘢𝘴 𝘳𝘦𝘧𝘦𝘳𝘳𝘦𝘥 𝘮𝘦 𝘵𝘰 𝘵𝘩𝘦 𝘧𝘶𝘯𝘥𝘴 𝘮𝘢𝘥𝘦 𝘢𝘷𝘢𝘪𝘭𝘢𝘣𝘭𝘦 𝘧𝘰𝘳 𝘱𝘢𝘺𝘮𝘦𝘯𝘵 𝘧𝘳𝘰𝘮 𝘪𝘵𝘴 𝘏𝘦𝘭𝘪𝘰𝘴 𝘧𝘶𝘯𝘥… 𝘢𝘨𝘢𝘪𝘯 𝘸𝘦 𝘢𝘳𝘦 𝘣𝘳𝘦𝘢𝘬𝘪𝘯𝘨 𝘵𝘩𝘦 𝘭𝘪𝘯𝘬 𝘣𝘦𝘵𝘸𝘦𝘦𝘯 𝘵𝘩𝘦 𝘧𝘰𝘳𝘮𝘦𝘳 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘳, 𝘵𝘩𝘦 𝘴𝘢𝘭𝘢𝘳𝘺 𝘢𝘯𝘥 𝘵𝘩𝘦 𝘱𝘦𝘯𝘴𝘪𝘰𝘯 𝘳𝘦𝘤𝘪𝘱𝘪𝘦𝘯𝘵𝘴. 𝘗𝘦𝘯𝘴𝘪𝘰𝘯𝘴 𝘢𝘳𝘦 𝘯𝘰𝘵 𝘤𝘩𝘢𝘳𝘪𝘵𝘢𝘣𝘭𝘦 𝘩𝘢𝘯𝘥-𝘰𝘶𝘵𝘴; 𝘵𝘩𝘪𝘴 𝘪𝘴 𝘮𝘰𝘯𝘦𝘺 𝘵𝘩𝘢𝘵 𝘱𝘦𝘰𝘱𝘭𝘦 𝘩𝘢𝘷𝘦 𝘦𝘢𝘳𝘯𝘦𝘥 𝘪𝘯 𝘵𝘩𝘦 𝘤𝘰𝘶𝘳𝘴𝘦 𝘰𝘧 𝘵𝘩𝘦𝘪𝘳 𝘸𝘰𝘳𝘬𝘪𝘯𝘨 𝘭𝘪𝘧𝘦.”   Pensioners have now started receiving reminders from the Chairman of the BP Benevolent Fund (the bp Helios Fund) to remind everyone that they have until the 31st March 2024 to apply for this one-off cost-of-living assistance grant (COLAG). We are also advised that the Fund has received approximately 3,700 applications to-date, with around 1,200 applicants having already received payments.   ➡ Does this suggest that BP are desperate to try and demonstrate that it has acted in the best interests of its pensioners, despite rejecting a ‘𝐟𝐚𝐢𝐫 𝐚𝐧𝐝 𝐚𝐟𝐟𝐨𝐫𝐝𝐚𝐛𝐥𝐞’ increase proposed by the BP Pension Fund Trustees?   ➡ Does this suggest that BP has ‘𝐬𝐨𝐥𝐯𝐞𝐝 𝐭𝐡𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧𝐬 𝐢𝐬𝐬𝐮𝐞’ with this one-off Grant?   𝐘𝐨𝐮 𝐝𝐞𝐜𝐢𝐝𝐞…   #BPpensions #csr #esg 

As many in the industry will be aware, most endgame strategies for defined benefit (DB) pension schemes have focused on achieving buy-out to fully de-risk the scheme. However, the improvements in DB funding are also driving some to think about running on their DB schemes instead. In this article, Carolyn Saunders and I explore the key issues that will need to be considered when running-on a scheme, as well as some practical takeaways for trustees and employers. https://lnkd.in/eZ6GiRUP

Are low credit spreads masking pension scheme risks?    In Paul Houghton's latest blog, he explores:    🔵 the impact of current low credit spreads on pension schemes;  🔵 potential pitfalls in de-risking strategies;  🔵 how this fits with the new DB Funding Code; and  🔵 re-evaluating long-term funding targets in light of market conditions.    Is your scheme's funding improvement real, or just a quirk of the current market?    Read our analysis to ensure you're making informed decisions about your pension strategy 👉 https://lnkd.in/eU8YnRnh   #PensionRisk #InvestmentStrategy #DBFunding 

Our latest analysis shows running a small DB pension scheme is 4 times costlier than a larger one. This cost gap is crucial for trustees and sponsors to weigh when deciding whether to continue the scheme or opt for a buy-out. Schemes below £250m are unlikely to persist solely based on economics. Laura McLaren commented “Running on beyond buy-out funding is likely to be expensive for small schemes. TPR’s 2014 research found that the mean cost of running a small DB scheme was £1,054 per member, compared with £505 for a medium scheme and £281 for a large scheme. Based on these numbers, our modelling suggests that for small schemes annual expenses are 0.55 per cent of scheme assets, compared with 0.13% per cent for large schemes. The practical costs and challenges of managing a scheme for another 20 years tend to be amplified for small schemes.” https://okt.to/QL0n8J #pensions #finances