Pension News October 2008


The Secretariat

There is not much to report in respect of the Secretariat, except that Loretta has successfully completed her six month probationary period and appears to be settling in well. Loretta has become a firm favourite of the pensioners and widows who have dealt with her.

Scheme Funding Statement

You should have all received your annual Scheme Funding Statement last month. As you will have seen it was basically a rehash of last year’s as there really was nothing new to tell you. By the time there is anything to tell you, you will be so bored with receiving the same old, same old that you will probably chuck it away without reading it.

Cash Equivalent Transfer Values

From 1 October 2008 it will be the responsibility of the Trustees to take the decisions on which assumptions the calculation of cash equivalent transfer values (CETVs) are based, as set out in government legislation. Previously the calculation had to be certified by the Fund’s actuary. At their meeting held on 2 September 2008 the Trustees instructed the Fund’s actuary on the basis to be used based on the actuary’s recommendations. (As if the Trustees do not have enough on their plate already!)

Disinvestment From Goldman Sachs

30 June 2008 was the redemption date for the disinvestment of the funds held by Goldman Sachs and the last instalment was paid across on 2 September 2008. These sums have now been invested in Guaranteed Deposit Accounts held by Bank of Scotland to earn the highest interest possible. This now means that the number of investment managers has reduced to four, these being Henderson Global Investors, BlackRock Alternative Advisors (Quellos), EIM SA and Legal & General Investment Management.

Pension Protection Fund (PPF) Levy

A recent survey found that although 61% of respondents support the existence of the lifeboat fund, 94% believed the structure to be unfair. One in four of the schemes surveyed believed that the levy could seriously jeopardise the future existence of their business with more than a third of respondents having the view that it is likely to negatively impact future pensions provision. Comments expressed in the survey ranged from the PPF levy as a corporate stealth tax threatening both pension provisions and employers to concerns that schemes are being forced to participate involuntarily.

The P.N.P.F. Trustees have had their own run in with the PPF over the 2007/08 levy. When an invoice amounting to £268,505.00 was received in April it was quickly dispatched to the actuary to check the accuracy of the calculation, where it was discovered that the PPF had used incorrect data which artificially inflated the fees being charged. It has taken 5 months of continuous appeals, but with Aon’s help we have managed to get the levy reduced to £131,443.00.

2007 Valuation and Impending Legal Proceedings

I am not going to add anything to what has already been communicated to members regarding the above. Suffice it to say no details of the 2007 valuation can be confirmed until it has been finalised and this is unlikely to be achieved before a decision is reached with regard to the legal proceedings. (A real “Catch 22” situation.) I can say that the papers have been served and the solicitors are attempting to agree a timetable in respect of the lodging of evidence.

Savings Crises

According to the Office of National Statics (ONS) in quarter 4 of 2007 pensioners suffered a bigger jump in the cost of living than most other households. The 5.6% rise in the cost of living is largely due to increases in food, electricity, gas and council tax bills. This gloomy fact was compounded by the additional statistic that revealed for the first time the U.K. has more people of pensionable age than children under 16.

Another recent survey, this time by the CBI, found that 3 in 10 employees reaching retirement age asked to postpone their retirement, with 8 out of 10 requests being granted. Many of the older workers were either not ready to retire or did not feel financially secure enough to do so.

Lost Data

It seems like we are being told, on a monthly basis, of another government department losing members’ personal data. But in Japan they do it on a mammoth scale. Japan’s social insurance agency admitted to misplacing 18.4 million records and confirmed that one of its official encouraged firms to make up records if they were lagging behind. (Maybe we are not so bad after all.)

Nova Scotia

Well I can think of nothing else to tell you about pensions and as I still have some space to fill I will bore you with details of my last holiday. It’s taken 34 years of marriage for my husband, Tom, to tell me that he had always wanted to visit Nova Scotia, because as a child he always considered it the back of beyond. (Well it has got to be better than Tierra del Fuego!) Not my first choice of destinations, but at least it did not involve too many medieval cathedrals, challenging sculptures or crowded beaches. It is a truly beautiful place and the denizens were definitely friendly. Tom now wants to retire there. The holiday definitely had a nautical feel and I learned more about the Bluenose racing schooner, the Titanic and trawler fishing than I could wish for, but the Canadians enthusiasm for their history was catching. I also attempted to eat my way through Nova Scotia’s annual lobster catch, but failed miserably.

Debbie Marten

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