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- The latest issues: 327
Pension News 10/05
PENSION NEWS
THE SECRETARIAT
I cannot believe we are in the last quarter of 2005 with just one more trustees meeting before the end of the year and the hustle and bustle of Christmas holidays to look forward to (although some of us get a pre-Christmas practice at Thanksgiving). Still the first three quarters of 2005 proved to be very busy for the Secretariat and I have no doubt that the last quarter will be the same.
VALUATION AS AT 31 DECEMBER 2004
The 2004 triennial valuation has been presented to the trustees and like many
To address the funding deficit the
Trustees have raised the normal retirement age of Existing Members for future accrual and carried out a substantial review of the asset allocation to determine how best to take the Fund forward. Perhaps most importantly the Trustees have obtained legal advice and a QC’s opinion and are now in discussions with the Participating Bodies and the UKMPA to decide how to deal with the deficit and formulate a recovery plan.
INVESTMENT REVIEW
Following the results of the triennial valuation the Trustees commissioned a review of the investment strategy. Although formal recommendations have yet to be received from the Investment Consultant the Trustees have agreed, following consultation with the employers, to invest 10% of the Fund’s assets in Goldman Sachs’ Direct Strategies funds. These funds are targeting high performance returns without increasing the Fund’s risk.
“A-DAY” PROTECTION
In late July forms were sent to all active members of the PNPF requesting details of any other retirement benefits they may have in order to determine whether they should be seeking independent advice prior to ‘ADay’ (
TRUSTEES TO GO BACK TO SCHOOL
Next year it is back to the classroom for trustees regardless of their standing or experience. The Pensions Regulator (TPR) will require them to show an understanding of pension law and practice as well as funding and investment. It cannot be avoided as in 2007 they will be required to report to the Headmaster (TPR) on how much learning they have done. They will not, however, have to pass any exams.
NEWS IN GENERAL
With effect from
PENSIONS PROTECTION FUND (PPF)
The Pensions Protection Fund has published a guide to PPF levies for 2005/06. These levies apply to defined benefit schemes and will be in two parts:
An initial levy of £15 for each active member or pensioner (including spouses and dependants) and £5 for each deferred member.
An administrative levy based on the number of members in a scheme, ranging from £24 per member for a scheme with less than 12 members to £0.74 per member for a scheme with over 10,000 members.
THE PENSIONS REGULATOR
From
SCHEME RETURNS
At the end of June 2005 The Pensions Regulator (TPR) sent out scheme return forms to 8000 occupational pension schemes. The returns asked for basic information including the scheme type and status, membership, details about trustees and advisers, financial information and details about participating employers. The trustees had eight weeks, until the end of August, to complete and return the forms. For the PNPF it was a bit like trying to put a square peg in a round hole given the uniqueness of the Fund.
CIVIL PARTNERSHIP ACT
From
Partnership Act will come into effect. This Act will bring with it a package of rights and responsibilities very similar to the legal status of married couples. Pension schemes will be required to provide survivor’s benefits for members of civil partners. Legislation prohibiting discrimination on the grounds of sexual orientation will be amended so that civil partners must be treated in the same way as married couples. In addition pension sharing orders will be available for civil partnerships that end.
MONEY PURCHASE (DC) SCHEMES OUTNUMBER
FINAL SALARY (DB) SCHEMES
For the first time the number of Defined Contribution (DC) schemes has overtaken the number of still open Defined Benefit (DB) schemes according to a survey published by Hewitt Associates.
The survey covered approximately 350 schemes and showed that 32% of organisations now offer DC compared to 28% with a DB scheme that was still open. 29% have a final salary scheme closed to new entrants while the remaining 11% consisted of schemes closed to further contributions and various forms of hybrid schemes.
An alarming trend is that fewer than 50% of employees covered by DC schemes actually contribute anything themselves. This, coupled with the fact that employers almost always pay in much less than under DB schemes, means that amount of money being put aside for the next generation of pensions is falling sharply.
Debbie Marten