The results of PTL’s recent Defined Benefit (DB) Risk survey (click here to see the results) showed that Brexit was one of trustees’ top three DB risks. So, one year on, what has happened, what are the risks and how can trustees mitigate them?
No doubt the second biggest event of the summer has been the release of the FCA Asset Management Study, albeit that it is a long way behind the start of the Tour De France - but they have something in common.
Apart from being a massive hit for Queen, this is a phrase that haunts Defined Benefit (DB) Trustees and Employers at each triennial valuation. Time after time the actuary comes to the table with the news the pension scheme members are expected to live longer, “It’s a Hard Life” for schemes “Under Pressure” of increasing liabilities.
I started my career at a time when the only paper emerging from a computer’s printer had pale green lines across it and perforations down the side, it folded at A3 intervals to form neat orderly piles that would gradually brown as they sat on the edge of your desk.
It’s the mental image of this stuff that comes to mind every time I think about investment transaction costs. Line after line of computer generated data detailing the up to, we think, 46 costs that could be incurred on each and every trade your fund manager makes. Terabytes of data – albeit more probably shared electronically these days.
First published in Professional Pensions, 22 June 2017
The role should be scrapped as pensions are too important to mess with.
So it's official. Richard Harrington was moved off the pensions brief after just 11 months. We then had a void for a week or two before finally, Guy Opperman was named as the new chap - albeit with an apparently extended (diluted?) brief to include financial inclusion. I welcome him and wish him luck. The cynic in me, however, also wonders how long it will be before I welcome and wish luck to his replacement.
First published in Pension Funds Online, 09 June 2017
The asset management industry is not used to having the spotlight shone on it, however it has come as a result of the debate on costs and charges. Donny Hay looks at the importance of transparency when dealing with costs.
In her January 2017 article titled "Understanding the transaction cost debate" my colleague Alison Bostock asked how DC trustees and Investment Governance Committees (IGCs) can meet their duty to assess whether transaction costs are value for money.
If you want to know if your service provider will be around long enough to service your pension scheme, ask them how they propose to adapt, says Richard Butcher, managing director of PTL.
There are, it is said, only two things in life that are certain: death and taxes. Despite this (and even though we spend a lot of time talking about tax) death is an almost taboo subject for discussion.
First published in Engaged Investor, 24 May 2017
Richard Butcher, managing director of PTL talks about his bugbear in any investment mandate but particularly a fiduciary one, that it is rarely clear who is involved.
I’ve got teenage kids and as a consequence, one of my recurring nightmares is the “facebook party”. You’ll have heard about these. Your teenage child asks “can I have a few friends round while you’re out on Saturday?” You reply, “Sure, but not too many and behave yourselves.”
Barely a month goes by without one of the trade papers publishing the headline that the combined pension deficit of the U.K.s largest companies has shot up/dropped (delete as appropriate) by some incredibly large number. The sensationalism of the headline will directly correlate with the number. This month those headlines were augmented by comments from Mercer suggesting that the recent slowing down of life expectancy improvements had wiped £2.5bn off the combined deficit.
Hmmm. It's time to pause for a moment and reflect on all this excitement.
http://www.pensions-expert.com/Comment-Analysis/How-to-ensure-your-consultants-are-not-conflictedTrustees are required to seek specialist advice when running their scheme and in doing so, conflicts of interest are likely to arise.
Most important though is how these are either handled or mitigated as good governance is an essential part of running a pension scheme.
There are some crucial points to consider for your scheme when evaluating the role of consultants.
Identify and record risks
One of them is identifying risks. Prepare a protocol to help identify risks and check that your policy specifically considers consultant conflicts, such as instances where the individual (or their firm) also advises the company. If this is not done, the independence of the advice could be called into question later.Advisers may well be conflicted, but this should not stop you from working with them. The trick is to identify and manage the conflict and mitigate your exposure.Make sure you record the range of risks facing the scheme that have been identified. A conflicts of interest register should be maintained recording the conflict and how it is being mitigated.When looking to appoint a new adviser, trustees should ask prospective advisers whether they have any existing conflicts or anticipate any in the future. Most advisers will be used to undertaking these checks, so this should not be a major problem.
Topics: pensions pensionconsultants