February 2009
'Deflation may cause insurers to cut payments' Speaking on deflation, Matthew Furniss comments:
"Trustees may have assumed that insurers paying bought-out pensions were subject to the same rules that occupational pension schemes are in relation to this floor.
"In fact, insurers are well within their rights to reduce pensions in payout should deflation occur. It is the trustees' responsibility to ensure that this protection is in place through the contract and may have easily been overlooked when transferring liabilities in the past as inflation rather than deflation was the concern." Professional Pensions, 26 February 2009
'PPF succumbs to pressure for levy deferral' Kevin Burgess is quoted:
Kevin Burgess, senior consultant at Punter Southall, commented in the current climate, the PPF levy is a significant financial burden for many companies.
It would be counterproductive if paying the PPF levy meant a company was more likely to fail and hence their scheme more likely to fall into the PPF, he said. Investment & Pensions Europe Online, 21 February 2009
'A downward spiral' Matthew Furniss is quoted on deflation:
Punter Southall senior consultant Matthew Furniss, who recently raised issues around deflation and buyout liabilities, believes deflation, if it occurs, will be driven predominantly by the dramatic collapse in oil prices.
Furniss says: "Oil prices falls will have a downward impact on food prices because of the transportation costs, and will also mean gas and electricity prices should fall further in the forthcoming months." Professional Pensions, 19 February 2009
'Going Places' Gerry Devenney is quoted:
"Punter Southall is committed to appointing the best and most able candidates for its clients, so we are delighted to have someone of John's calibre on board.
He will be an excellent addition to our team and will help us continue to grow our operation north of the border." Pensions Week, 16 February 2009
'Buy-out index records difficult A4 2008' Matthew Furniss is quoted:
Meanwhile, Punter Southall senior consultant, Matthew Furniss, has warned of the damages of a mismatch between liabilities bought in or out with insurance companies and expectations from trustees and members.
Buy-outs have been promoted as complete solutions to trustees and companies but this may not necessarily be the case particularly with the prospect of deflation.
Although deflation in the economy is now a real possibility, pensions paid through defined benefit occupational schemes are normally protected from this. This protection should be replicated in any buy-out of buy-in. However, it is not certain that this has been applied in all cases historically following comments from such insurers.
Furniss recommends that trustees who have already bought out liabilities should review the terms of buy-out, and where a scheme has would-up, look at bringing a claim in relation to the issue. Those buy-in will not have any concerns with members claims, but should be prepared to make up any shortfall in pension payments.
Trustees in the process of buying-out or buying-on should ensure that this issue is addressed with the respective insurers and be aware that all benefits should be explained an as much detail as is necessary, Allowance for the floor may increase premiums payable to the insurers, he added. Pensions Age (Web), 3 February 2009
'PPF look set to raise pension fund levy' Speaking on the PPF levy deficit in the face of increasing insolvencies, Danny Vassiliades comments:
Vassiliades of pension consultancy actuaries Punter Southall agreed: "Even the PPF would not have imagined it [the number of insolvencies] to be on this vast scale. This means they are accepting more pension scheme liabilities without necessarily the assets to cover them. The ensuing deficit can only be recovered by a greater levy on the existing defined benefit schemes," he added. Daily Telegraph (Business), 2 February 2009
Speaking on the benefit of the weak pound for overseas scheme sponsors, Danny Vassiliades comments:
Schemes with overseas employers should ask them to make special contributions to exploit the weak pound, according to Danny Vassiliades, principal at Punter Southall. "A €10m contribution would now make up a £9.5m deficit, whereas a year ago it would have only funded a £7.4m deficit," he said. "This opportunity may close more quickly than expected." Pensions Week, 2 February 2009
'The pensions Squeeze' Kevin Burgess is quoted:
And "from a charity's point of view it's a lower cost than it would be if they were, for example to buy out the benefits with an insurance company" says Punter Southall's Kevin Burgess.
"I personally haven't witnessed any charities doing this, but quite a few commercial organisations have. I think one thing to be wary of is that if you're giving an enhancement to the transfer value it is usually means it is coming from the employer rather than out of the scheme, and that's another area where charities may struggle to get that extra money, or may have restrictions on what they can do with any money they have in their reserves." Charity Times, 1 February 2009
'Transparent transfers' Speaking on transfer values, Danny Vassiliades comments:
Danny Vassiliades, principal and head of employer consulting at Punter Southall, says it is best practice for employers to offer employees independent financial advice to establish whether or not they are suitable to enter into an ETV arrangement.
"It is not suitable for everybody," he explains, "It depends on age and marital status, their expectations of their life expectancy and their attitude to investment. If they have got loads of savings they might be able to take more of a risk with their pension fund. If their pensions fund is all they have got for their retirement, they might be more risk averse. It is a unique decision and this is why a lot of people need financial advice". Employee Benefits, 1 February 2009
'Countdown to pensions revolution' Speaking on the future of pensions, Jane Beverley comments:
"Virtually all defined benefit schemes in the country will meet the criteria, which is a 1/120th accrual rate, whereas 1/60th or 1/80th is much more common". Employee Benefits, 1 February 2009
'Deflation may benefit UK pensions' Speaking on the potential benefit of deflation for pensions, Matthew Furniss is quoted:
Furniss said: "The government has also recently ensured that the basic state pension will increase by a minimum of 2.5% each year which will safeguard any future increases from deflation. Company pensions are also protected from deflation as they cannot normally be reduced and a proportion of pensions are increased by fixed percentages, normally between 2.5% and 5% per year." Global Pensions, 1 February 2009
Punter Southall Pensions Bulletin - July 2010