Pension News 10/04

October 15th, 2004 by JCB
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PENSION NEWS

 

PNPF AND THE SECRETARIAT

From November 2004 it will be a busy 18 months or so for all of us in the Secretariat and the Trustees as well. In addition to the normal day to day running of the Fund the triennial valuation is due as from 31 December 2004 and we will be working hard at providing the actuary with all the information and data he will need to calculate and finalise this valuation.  Prior to this the Trustees have decided to carry out a review of the Fund’s actuary and investment consultant to ensure that the service is conducted in a manner which will provide the highest quality of advice and service for a reasonable cost. The Trustees are looking for cost effectiveness.  If the review results in a change of advisor(s) then it is anticipated that they will be in place prior to the 2004 valuation.  We will have just sorted all this and the Finance and Pension Bills heave into view with some changes needing to be implemented by April 2005 and others by April 2006. Once these legislations have been well and truly signed, sealed and delivered then the Trustees will have to decide what amendments will need to be made to the PNPF Rules and these will subsequently be communicated to all members.

We have begun the process of identifying members that may be adversely affected by the new legislation and I am pleased to say it is very few.

I am sure that by the time summer 2006 comes around we will all heave a collective sigh of relief.

RUMOURS

PNPF Benefit Changes

This brings me neatly to some rumours that have reached our ears regarding changes in the PNPF benefits. Some members appear to be under the misapprehension that changes are going to be made in anticipation of the results of the 2004 valuation. The only pre-emptive strike the Trustees are looking at making prior to the valuation results being finalised is to look at alternative investment classes and how they might add value and reduce risk for the Fund. The Trustees have not taken any decision to change benefits.

Pension Bill

Instead of being the panacea to

complicated and inflexible pension

legislation this Bill appears to be increasing in size and complexity. There is likely to be a further 100 sets of statutory instruments added to it, and it already includes 300 clauses, before it receives Royal Assent.  In a recent article, Alan Pickering, the author of the Simplification Report urged ministers to scrap the Pensions Bill as it was a ‘dreadful’ piece of legislation. Pickering further commented that all the amendments have made it too long and too complicated and will fail to encourage pension saving in its current form. In addition to this criticism of the Bill, industry leaders are calling for the newlyappointed work and pensions secretary to “overhaul” the Bill.

So perhaps the rumour that the Pensions Bill will be scrapped to make way for new laws to ban fox hunting are true. Although most commentators say it would be political suicide for the Government to drop the Bill now.

PENSION PROVISION

During a recent television interview, Alan Johnson, the new work and pensions secretary, dismissed the calls to increase the age of retirement and described compulsory membership of schemes as a “very complex and difficult issue”. Mr. Johnson said that the government wanted to encourage people to retire later by offering greater flexibility rather than increasing the pension age to 70 as called for by the Confederation of British Industry. What makes you think a general election is due soon?

NEWS IN BRIEF

First PPF Chair Appointed

Lawrence Churchill, currently Chief Executive of Life business at Zurich Financial Services has been appointed to chair the board of the Pension Protection Fund (PPF).

Financial Assistance Scheme

The Department of Work and Pensions has announced the provision of a Financial Assistance Scheme worth £400 million to provide compensation for workers who have lost their pension benefits when their employers wound up their pension schemes.

Final Salary Schemes Closure Slowing

According to recent research the rate of final salary schemes closure is slowing as more employers take actions to retain plans on a more cost-effective basis.

TUC Threaten Further Strikes

The trade unions are threatening more strikes to defend pension benefits unless radical steps are taken by the government to halt the growing pension crises.

Early Retirement

Despite the current pension crises and increasing restrictions placed by employers on early retirement, members of final salary pension schemes continue to retire early. A recent study revealed that the average age for leaving work early fell from 61 in 1985 to 59 in 2003. Among defined benefit scheme members in 2003 59% of men retired under the age of 60 compared to 45% in 1985, whilst among women 60% of those who retired in 2003 were under age 60 as compared to 45% in 1985.

Debbie Marten

debbie@pnpf.co.uk