UK Pensions Industry: Governance, Endgames and Regulation
The Changing Landscape of the UK Pension Industry
The UK pensions landscape is undergoing a seismic transformation. Many defined benefit (DB) schemes are now in their 'endgame' and trustees are faced with a range of challenges. Mature schemes need to secure members benefits or de-risk. De-risking can take a variety of forms, including buy-ins or buyouts, most often via a bulk annuity purchase, scheme consolidations, and changing asset allocations to generate an increasing certainty of outcome.
Meanwhile, DC scheme regulation becomes more onerous, with the Pensions Regulator (TPR) now beginning to bark a little louder! Trustees are now expected to put out to competitive tender fiduciary management services, produce a Statement of Investment Principles (SIP) and produce a compliant annual governance statement. This collection of papers sheds light on the current state of the UK Pensions landscape whilst providing insights into what other changes are likely in the future.
UK PENSIONS GOVERNANCE AND TRUSTEESHIP
The UK Pensions Governance Gap: Identifying and mitigating risks (AMX, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
In this paper, the Asset Management Exchange (AMX) highlights the responsibilities of trustees and the potential risks that they might face, particularly in the areas of operational and technical systems.
Biases in Trustee Decision Making: Insights from Behavioural Finance (IFoA, 2018)
The Institute and Faculty of Actuaries outlines the findings of an investigation into the decision-making biases of pension fund trustees.
UK Pensions and ESG: The Evolving Legal and Regulatory Landscape - a practical guide (2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
This guide from Herbert Smith Freehills and Royal London outlines the obligations that pension fund trustees, pension providers and asset managers have under new regulations and how they can factor ESG risks into their investment strategies.
DC PENSIONS
UK Pensions: The DC Future Book (PPI/Columbia Threadneedle, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
Columbia Threadneedle's annual DC Future Book offers timely insight and guidance for investment managers on the likely route to be taken by the DC market.
The new era of defined contribution investing for UK pensions (Capital Group, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
This report from Capital Group notes how the UK defined contribution (DC) investment market has matured and increased in scale. This, in conjunction with organic asset growth and scheme consolidation, has enabled a member-centric approach to the design of new investment products.
DEFINED BENEFIT SCHEMES
UK Risk Transfer Report (Hymans Robertson, 2020)
(For compliance reasons, this paper is only accessible in Certain Geographies)
This report by Hymans Robertson examines the more recent changes in the UK bulk annuity market.
2019 UK Pension Scheme Funding Survey (PwC)
(For compliance reasons, this paper is only accessible in Certain Geographies)
PwC's survey on UK pension scheme funding has been running for over a decade. This edition covers some 245 schemes with more than ￡250bn in liabilities.
The UK DB Landscape (The Pensions Regulator, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
This annual report from the Pensions Regulator covers all DB occupational schemes, those providing DC benefits, as well as those schemes which fall outside the scope of the Pension Protection Fund (PPF).
FTSE350 DB Pensions Analysis 2019 (Hymans Robertson)
(For compliance reasons, this paper is only accessible in Certain Geographies)
In their eleventh annual FTSE 350 pension analysis report, Hymans Robertson look at the UK DB schemes of the FTSE 350 and places them into the context of the companies that support those schemes. Consolidation amongst plans slowed but is expected to pick up again in 2020.
2019 Emerging Trends in UK DB Survey (Willis Towers Watson)
(For compliance reasons, this paper is only accessible in Certain Geographies)
Willis Towers Watson investigates emerging trends in the UK DB market and how pension scheme decision makers are reacting to developments.
The future of Defined Benefit pension schemes in the UK (PPI, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
The Pension Policy Institute (PPI) notes the changing approaches of defined benefit (DB) schemes to their endgame scenarios including bulk annuity purchases, consolidation of schemes or the transfer of liabilities to a third party.
The Final Push for UK DB Pension Schemes (Insight Investment, 2020)
(For compliance reasons, this paper is only accessible in Certain Geographies)
Insight Investment surveyed members of the Pensions Management Institute to uncover observations of how investors can plan for DB endgames.
Charging structures for UK pensions: An outcomes-focused analysis (PPI, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
This paper by the Pensions Policy Institute investigates the extent to which charging structures and levels matter, and what other changes are required to aid people to have a retirement income that meets their needs.
UK DB Pension Scheme Leverage and Liquidity Survey (The Pensions Regulator, 2019)
(For compliance reasons, this paper is only accessible in Certain Geographies)
The Pension Regulator’s (TPR’s) defined benefit (DB) pension scheme leverage and liquidity survey was undertaken to help the TPR and Bank of England assess the potential for systemic risk from the use of leverage in DB schemes.
GLOBAL PENSIONS
Global Pension Assets Study 2020 (Thinking Ahead Institute)
This is the Thinking Ahead Institute's latest Global Pension Assets Study into 22 major pension markets, totaling some $46.7 trillion in assets. It takes a deep dive into the seven largest markets which account for over 90% of total pension assets.
Top 100 Largest Public Pension Rankings by Total Assets (SWF Institute, 2020)
This is the Sovereign Wealth Fund (SWF) Institute's latest ranking of the 100 most significant global pension funds, as ranked by their total assets.
ABOUT THE AUTHOR
Andrew Perrins is a former Actuary and Asset Allocator. After qualifying as an Actuary, he worked for 15 years in investment management, serving as Director of Asset Allocation for Abbey Life and for Chase Manhattan, before setting out on a more entrepreneurial path.
To contact him, email [email protected]