At the beginning of the year, the biggest concerns among trustees were the abolition of contracting out, the introduction of the annual allowance taper and the potential for further radical reform of pensions tax relief.
How things have changed over the past three months.
Britain’s decision to leave the European Union is likely to have a radical effect on UK pensions. Indeed, our Pensions Buzz survey, conducted just after the referendum, found that two-thirds (67%) of respondents felt Britain had done the wrong thing in voting for exit.
In addition, some 51% believed Brexit would have a negative impact on UK pensions over the medium- to long-term.
The PP Investment Confidence Tracker Index – which measures how confident respondents are that scheme investments will be at a higher level in six months time – fell to what we think is an all-time low of -26.52.
But it isn’t all about Brexit. The other key area of coverage has been the increased focus on funding in the wake of the turmoil surrounding BHS – turmoil that has led to a parliamentary inquiry, a probe that is likely to go on until at least the end of this year.
The falls in gilt yields haven’t helped.
Indeed, the fall in gilt yields following Brexit was calculated to have increased the total defined benefit deficit to £820bn, a figure that is likely to have increased as gilt yields have fallen to all-time lows.
There is a growing fear an increasing number of schemes will simply not be able to afford the promises they have made unless yields pick up soon.
Indeed, the government is already considering whether it should take action to modify these pension promises in at least one case, that of the British Steel Pension Scheme, where it has consulted on whether to, among other things, reduce the scheme’s liabilities through legislation. Should this happen, it is possible other firms would call for similar overrides to be applied to their schemes as well.
Pensions and Benefits UK
Pensions and Benefits UK returned to the heart of Westminster, the Queen Elizabeth II Conference Centre, for its 2016 annual conference and exhibition on 28-29 June.
The conference – which fully integrates pensions and institutional investment with employee benefits and wellbeing – was attended by over 550 delegates and heard from over 100 speakers over the two days.
Key topics at the conference included Brexit, the future of employee benefits and communicating to the multi-generational workforce and speakers at the two-day event included pensions minister Baroness Ros Altmann, The Pensions Regulator chief executive Lesley Titcomb, International Employee Benefits Association treasurer Tim Reay and the BBC’s Nick Robinson
The winners of the Pension Scheme of the Year Awards 2016 were announced at a drinks reception on 14 July.
We will also be holding an exclusive winners’ dinner on 22 September to celebrate the achievements of those schemes and individuals who have won accolades at the awards.
The last two months has been exceptionally busy in terms of our awards programmes and we announced the winners of the UK Pensions Awards at a gala dinner at London’s Grosvenor House Hotel on 5 May.
Details of how to enter and be part of next year’s UK Pensions Awards – the 20th anniversary awards – will be announced in autumn.
In addition to this, we will be publishing the shortlist of the PP Investment Awards later this summer. More information on this soon.
The Professional Pensions editorial team
We hope you find this update useful. Please let us know what you think of this update by emailing Joe Kiddle at [email protected] and let us know what you would like to see more of in future.