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Written by Occupational Pensions
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Tuesday, 01 May 2012 00:00 |
THE 2012 BUDGET CONFIRMED THAT EXISTING PROPOSALS RELATING TO STATE PENSIONS AND STATE PENSION AGE WOULD GO AHEAD. IT ALSO INCLUDED A MASS OF FINE DETAIL ON OTHER ISSUES WITH WHICH THE INDUSTRY WILL NEED TO GET TO GRIPS.
SUMMARY OF KEY POINTS
- The chancellor of the exchequer confirmed in his recent Budget statement that the government plans to introduce a new singletier state pension for future pensioners, set above the means test.
- The chancellor also confirmed that there will be an automatic review of state pension age to ensure it keeps pace with increases in longevity.
- From April 2013, the cash value of the age allowances for existing pensioners will be frozen until they are overtaken by the increasing personal allowance.
- The top rate of income tax is to be reduced from 50p to 45p from April 2013, so it will be more attractive to make pension contributions in the current tax year for those affected.
- The Finance Bill 2013 is to include provisions allowing bridging pensions to be paid up to state pension age as it is raised beyond 65.
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Written by Occupational Pensions
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Tuesday, 01 May 2012 00:00 |
IT IS PERHAPS JUST AS WELL THAT UK PENSION FUNDS NOW HOLD FAR FEWER ASSETS IN EQUITIES. IN 2011, PENSION FUNDS’ BOND AND INDEXED-LINKED RETURNS FAR OUTSTRIPPED THOSE OF EQUITY INVESTMENTS AND ENSURED THAT THE AVERAGE SCHEME ACHIEVED POSITIVE RETURNS FOR A THIRD SUCCESSIVE YEAR.
SUMMARY OF KEY POINTS
- The weighted average return for UK segregated pension funds in 2011 was 3.6%, according to The WM Company, and 4.3%, according to BNY Mellon. It was the third year of positive average returns.
- The median return on all the major asset classes, except for equities, was positive. Among the main equity classes, only investments in North America saw positive returns, on average. Bonds and index-linked securities achieved very strong returns.
- Over 20 years the annualised returns for equities, bonds and property are all between 8% and 9%.
- Two asset allocation trends were maintained in 2011, with the shift out of equities and into bonds and with the move from UK to overseas equities.
- Research by BNY Mellon shows that, in 2011 and over the latest 10-year period, the largest pension funds have not achieved the best returns.
- According to BNY Mellon, the median balanced pooled fund returned –5.3% in 2011.
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Written by Occupational Pensions
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Tuesday, 01 May 2012 00:00 |
THE WORK AND PENSIONS COMMITTEE’S REPORT ON AUTOMATIC ENROLMENT PROPOSES THAT TWO MAJOR RESTRICTIONS ON THE OPERATION OF NEST SHOULD BE LIFTED AS A MATTER OF URGENCY. WE EXAMINE THE SELECT COMMITTEE’S RECOMMENDATIONS.
SUMMARY OF KEY POINTS
- The House of Commons Work and Pensions Committee has reported on its inquiry into auto-enrolment.
- The committee’s main recommendations are that the restrictions on the level of contributions and on transfers-in to Nest should be lifted as a matter of urgency.
- Concerned about the complexity of pension scheme charges, the committee suggests that a model should be established to enable users to compare the costs of different schemes, and that the government should monitor charges on a regular basis.
- While recognising the administrative burdens that automatic enrolment places on employers, the committee expresses concerns about the delay in the introduction of the duty for smaller employers.
- The committee suggests that the Pensions Regulator needs to consider carefully how it intends to achieve compliance with the auto- enrolment duty.
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Written by Occupational Pensions
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Tuesday, 01 May 2012 00:00 |
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MINISTER FOR PENSIONS Steve Webb has sketched out plans for a new type of pension scheme that shares the risk between employers and employees. He has dubbed the new pension a “defined ambition” arrangement. The minister sets out his thoughts in an article penned by himself and published in the Daily Telegraph. He recognises that it is now “almost impossible to find a major firm in the private sector offering a final-salary scheme to new employees and [that] many firms are closing their schemes even for existing employees”. He acknowledges that “the most common alternative model being used by firms is a ‘defined-contribution’ pension scheme.” As the minister says: “This offers less funding risk for the employer, but less certainty about what the final pension might be for members. The only certainty is the amount of money going in.”
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Read more... [Pensions minister looks for a new middle way]
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Written by Occupational Pensions
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Tuesday, 01 May 2012 00:00 |
THE Department for Work and Pensions (DWP) has decided on the earnings trigger to be used for auto-enrolment and the band of earnings on which contributions will be based.
Following consultation on the ap prop riate figures, the DWP’s response paper announces that the upper limit on qualifying earnings has been raised. It has retained the flexibility to review the trigger and limits annually without any predetermined mechanism for uprating.
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Read more... [DWP sets auto-enrolment earnings band and trigger]
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