Corporate Consulting - Barnett Waddingham


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This blog is written by Barnett Waddingham’s Corporate Consulting Practice and will be of particular interest to Finance and HR Directors.

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Fri 20 April 2012

Enhanced bulk annuities

One idea that is gaining traction for defined benefit schemes considering a buy-in or buyout for pensioners is the use of enhanced annuities. Previously, these products have only been offered by individual annuity providers but bulk annuity equivalents are now emerging. The use of enhanced annuities can reduce the premium paid for insuring the benefits significantly. Why might they be cheaper? Fir... (read more)

Posted By: Mark Paxton

Mon 12 March 2012

PPF Deadline Fast Approaching

The deadline for taking any corrective action to mitigate the 2012/13 levy is fast approaching. Click here to see our article in Financial Director highlighting some of the issues companies should be considering. (read more)

Posted By: Nick Griggs

Mon 30 January 2012

UK Pensions P&L Charge to Increase

The Accounting Standards Board is proposing to follow the International Accounting Standards Board in moving away from allowing companies to set the expected return on a Scheme’s assets according to the assets actually held by the Scheme. Instead the calculation used to calculate the P&L charge will, from 2015, effectively assume all assets are invested in AA-rated corporate bonds. As AA rated bon... (read more)

Posted By: Nick Griggs

Wed 18 January 2012

Longevity swaps: finally taking off?

After the initial flurry of longevity swap deals with UK pension schemes in 2009 and early 2010, this market hit a lull. In the following eighteen months, only one deal was completed – the population index swap between JP Morgan and the Pall (UK) Pension Fund in January 2011. Various reasons for this lull were suggested including the high prices quoted, the complexity of these swap products and th... (read more)

Posted By: Mark Paxton

Wed 30 November 2011

Rolls Royce drives down pension scheme risk

For many pension schemes, longevity risk persists as the last of the three major unrewarded risks that has yet to be hedged (the others being interest rates and inflation). By unrewarded we mean that no excess returns or benefit is expected from taking that risk (we haven’t experienced a “shock”, or sharp increase, in mortality since the great flu of 1918!). Increasingly schemes are exploring long... (read more)

Posted By: Catherine Love Soper

Tue 29 November 2011

Auto-enrolment delayed – or is it?

The Government has announced that it intends to delay the introduction of automatic pension scheme enrolment for millions of workers. In a move designed to reduce the economic burden on firms with less than 50 employees, the start date for auto-enrolment for these employers is being moved back from April 2014 to May 2015. As well as offering respite to smaller firms, the staging dates for employer... (read more)

Posted By: Ben Roach

Tue 29 November 2011

Buy-outs and buy-ins: the market expands

The bulk annuity market has seen three new arrivals – Abbey Life, Pensions First and Nomura. Abbey Life are already quoting while Pensions First and Nomura are having initial discussion with clients. After the departure from the market of Paternoster and Alico in 2010, having some new entrants is a welcome development. Competition for medium and larger deals will hopefully increase – both in terms... (read more)

Posted By: Mark Paxton

Mon 24 October 2011

The Regulator hits back at Pre-Pack

The Regulator hits back at Pre-Pack Following the pre-pack insolvency cases of Silent Night (see May 2011 blog) and, more recently, Brintons by the Carlyle Group, the Pensions Regulator (“the Regulator”) has announced that it intends to take action against private equity firms “triggering pre-pack insolvencies to ditch pension scheme liabilities”. The chairman added that they have opened investiga... (read more)

Posted By: Catherine Love Soper

Fri 21 October 2011

Boots’ kicking mustn’t hold back the rise of Liability Reduction Exercises

Against a backdrop of falling asset values and rising buy-out costs for defined benefit schemes, employers are increasingly turning to Liability Reduction Exercises (LREs) to de-risk their schemes and get liabilities off their balance sheet. LREs involve offering members of defined benefit pension schemes an opportunity to exchange their current pension for an alternative benefit, which is expecte... (read more)

Posted By: Catherine Love Soper

Wed 28 September 2011

Can you recertify your PPF Guarantee?

Employers that have put in place a PPF group guarantee will want to consider one of the proposals in the latest PPF consultation document to strengthen the re-certification requirements. It has been proposed that schemes will need to certify that the guarantor “could be expected to meet their full commitment under the contingent asset if called upon to do so”. In many cases the amount guaranteed i... (read more)

Posted By: Nick Griggs

Tue 23 August 2011

ITV: A PIE, an SPV and now a Longevity Swap

Yesterday ITV announced they have entered into a £1.7 billion longevity swap with Credit Suisse, kick starting this market back to life. This is the third largest longevity swap ever to be written (that is in the public domain at least) and hedges against the risk that the pensioners in the ITV pension scheme live longer than expected. It is the first deal of its kind in 2011 although January 2011... (read more)

Posted By: Catherine Love Soper

Thu 28 July 2011

The real impact of defined benefit pension schemes on UK businesses

A small number of high profile cases are often used to highlight the impact that DB pension schemes can have on businesses – but what is the real impact that DB schemes are having on UK businesses as a whole? We have undertaken a research project, with input from the Centre for Global Finance at the University of the West of England, into the impact on the FTSE350 to try and answer this question. ... (read more)

Posted By: Nick Griggs

Wed 06 July 2011

Employer Debt Rules - Useful new option

The DWP has published a consultation on further amendments to the Employer Debt regulations. These regulations determine amount an employer is required to pay when it ceases to participate in a defined benefit pension scheme and are already very complex. The new proposals do, however, offer increased flexibility so we think they are a welcome addition and will be of benefit to scheme sponsors. The... (read more)

Posted By: Martin Hooper

Mon 27 June 2011

Trust Based DC - Refund Rules Tightened

If you have a trust based DC arrangement or were thinking about using one to comply with the requirements of auto-enrolment then you may wish to reconsider this decision. The Department for Works and Pensions (DWP) has announced that it intends to alter the rules on short service refunds from trust based DC scheme as they may impact on the success of auto-enrolment. The ability to pay short servic... (read more)

Posted By: Nick Griggs

Thu 16 June 2011

IAS19 - Increased Pension Costs

The International Accounting Standards Board (IASB) has today published a final version of the revised IAS19 standard. The revised standard will take effect for financial years beginning on or after 1 January 2013 although earlier adoption will be permitted. The IASB has adopted most of the key proposals set out in the exposure draft published in 2010. These include: Companies will no longer have ... (read more)

Posted By: Nick Griggs

Tue 24 May 2011

Legal Loophole or Silent Nightmare?

The restructuring of Silentnight could be swiftly turning from a fairytale rescue of 1,250 jobs into a nightmare realisation that the £100 million pension debt might not have disappeared for private equity firm HIG Capital. After acquiring Silentnight’s senior debt, HIG attempted a restructure of Silentnight through a creditors’ voluntary agreement offering trade creditors 65p in the pound but onl... (read more)

Posted By: Catherine Love Soper

Mon 16 May 2011

10 is the magic number

The PPF have today confirmed their final proposals for the changes to be made to the calculation of their annual levy. As expected these are broadly in line with the proposals published late last year. Encouragingly the PPF have again listened to comments from industry and refinements have been made to reflect many of the concerns that were raised. One of the major concerns with the current levy s... (read more)

Posted By: Nick Griggs

Mon 18 April 2011

Simplification of the State Pension - Higher Costs for Sponsors?

T he Government has launched a consultation on ways to create a simpler, fairer and fiscally sustainable state pension which will, in theory, reduce barriers to private saving and simplify decisions on how much to save for retirement. One of the Government’s more radical proposals is to combine the Basic State Pension and the State Second Pension (“S2P”) to create a single tier flat rate pension t... (read more)

Posted By: Catherine Love Soper

Tue 01 March 2011

Sex Discrimination - A step too far?

Today's ruling by the European Court of Justice could prohibit insurers from using a person's sex in determining the premium they charge or the benefits they provide under an annuity policy. A person's sex is a well established objective factor that allows insurers to better classify the risk. There will be a significant impact on the annuity market where there are significant differences in life ... (read more)

Posted By: Nick Griggs

Wed 23 February 2011

Enhanced Protection - Don't accidently lose it!

The auto-enrolment legislation will require employees to join their employer's pension scheme from next year with no ability to opt out in advance. Therefore, if you have registered for Enhanced Protection you risk losing it if you do not opt out immediately. HMRC confirmed to us late last year that provided you opt out within the month of being auto-enrolled, you are legally considered not to hav... (read more)

Posted By: Nick Griggs

Fri 28 January 2011

Timely accounts could reduce your PPF levy

The Pension Protection Fund (PPF) is currently considering its method for calculating levies payable by schemes from 2012 onwards. One of the fundamental changes proposed is the averaging of the Dun and Bradstreet (D&B) failure scores so that the levy will be calculated using scores over a 12 month period rather than simply the score at 31 March each year. Whilst this means that 31 March 2011 may ... (read more)

Posted By: Ben Roach

Fri 10 December 2010

RPI/CPI - Drafting Lottery

It was widely reported in the press that the Government was going to introduce legislation that would allow all private sector pension schemes to use CPI rather than the RPI as the measure of inflation for increasing pensions. Unfortunately for employers these rumours proved unfounded and the Government has missed another opportunity to help companies that are struggling to finance their pension s... (read more)

Posted By: Nick Griggs

Wed 27 October 2010

More detail unveiled today on pension scheme auto-enrolment

Despite politicians having good intentions for sparing NEST (National Employment Savings Trust) the axe in last week’s comprehensive spending review (improving the pensions provision of millions of workers with the added bonus of reducing the Government’s means testing bill), there is still the danger of increasing the complex regulatory burden on employers aiming to provide good pension schemes. ... (read more)

Posted By: Ben Roach

Mon 18 October 2010

Pension Tax Changes - Simplification!

The Government has confirmed the main changes it intends to make to the pension tax relief system although many detailed points remain unclear. As expected the revised proposals represent a welcome simplification of the original proposals and show that the new Government has listened to industry comments. The main headlines are: · A reduction in the Annual Allowance (AA) from £255,000 to £50,000 f... (read more)

Posted By: Nick Griggs

Thu 30 September 2010

PPF 2011/12 Levy

The PPF has announced how it will calculate the 2011/12 PPF Levy (i.e. the invoice schemes will receive this time next year). It’s encouraging that the PPF is going to recognise the move to CPI and this will reduce levies by around 20%. This is also encouraging for companies that are looking for their scheme to switch from RPI to CPI pension increases as this must make it harder for the Government... (read more)

Posted By: Nick Griggs

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