Press Releases

Head of Trustee Consulting at Hymans Robertson, Calum Cooper comments on the findings from the PPF's 2016 Purple Book.

The Government has confirmed its longstanding belief that schemes ought to adjust their pensions to compensate for disparities in Guaranteed Minimum Pension (GMP) for men and women, and is consulting on a proposed methodology for doing this.  

A truly integrated approach will reduce the likelihood of deficits staying stubbornly high from ‘1 in 4’ to ‘1 in 12’ over a 20 year period. Only 1/3 schemes are likely to reach funding goals by 2036. The number of schemes reaching their goals could increase by 50% to 1 in 2 with a fully integrated approach to scheme management that incorporates the risk of sponsor default

The Chancellor’s announcement that the Money Purchase Annual Allowance will be reduced to £4,000 from £10,000 in April 2017 is a blow to flexible working. 

Our 3DAnalytics, which provides real-time updates to the funding positions of DB pension schemes, has shown that the total UK DB deficit has gone down by £35bn since the US election result and down by over £200bn from a record high of over £1 trillion in August.

 People working for longer should be expected for a number of reasons. First, we’re living longer. Second, much of the change is driven by women where retirement age equalisation policies will have influenced employment patterns at older ages. Thirdly, we’re reaching a point where we’re starting to see the first cohorts DC savers retire, and many of them won’t have enough saved to retire comfortably. However, I also hope that the health benefits associated with work are starting to be appreciated too, so that some of this change is voluntary rather than required to make ends meet.

We've launched a new approach to DC investment to offset the effects of lower yields post-Brexit. Analysis of over half a million DC scheme members on our Guided Outcomes (GO) framework has shown that post Brexit, the number of DC investors who will fail to achieve an adequate income in retirement has increased from two thirds to three quarters. As a result, some savers will now need to contribute up to 20% of earnings to achieve an adequate income in retirement.

How and why do people make the decisions they do about planning for later life?  And with people now living much longer, what opportunities does this present?  These are questions communications agency like minds have been exploring.  Their new film, commissioned with ITN productions, and which was just launched at the PSLA Annual conference, explores these questions. 

The film highlights some of the key themes behind research they are currently conducting with the School Of Life to explore the psychological, behavioural and emotional barriers which lie behind ‘how’ and ‘why’ people make their decisions for later life.

61% of workers under 40 would open a LISA, and of those 23% plan to do so straight away. 72% in London would open a LISA, and 37% straight away, reflecting the difficulty for young people getting on the property ladder in the capital. The Government bonus (57%), followed by the flexibility of being able to use savings towards a first home rather than having it tied up until retirement (36%), are the main attractions of the LISA. Of those who would consider opening a LISA, 68% would save into a LISA alongside a pension, with 49% saving more to a pension and 19% more to a LISA. Those who wouldn’t consider opening a LISA cited the early exit penalty (41%) and preferring to save through a pension to take advantage of employer contributions (34%). Saving priorities tend to be short term. Saving for a home and holidays topped the lists, with paying off debt and saving for everyday living costs ranking higher than retirement savings.

Nationwide, the world’s largest building society is the latest client to sign up to the firm’s award-winning Guided Outcomes (GO) proposition;
GO is a simple online solution that helps Defined Contribution (DC) pension savers meet retirement income goals by setting an income target and helping savers make decisions to get on track to meet it. 
Nationwide’s 12,000 employees will have access to the platform, helping them save for retirement. 

Commenting on the Government’s U-turn on secondary annuities, Douglas Anderson, Partner and Founder of Club Vita and Life & Financial Services said:

“This is good news for consumers. While some retirees may feel a sense of disappointment as they feel trapped in a product they didn’t want to buy, in reality, getting value for money from cashing in annuities would have been a tall order. With freedom to sell came the risk of making poor decisions. There simply would not have been enough protection in place for consumers come April. 

Comments on life expectancy to coincide with John Cridland’s interim report on the State Pension Age

Key points:

The state pension age (SPA) hasn’t changed since 1925 (except equalisation between men and women);
Back in the 1920s, you would get 1 year of state pension for every 4 years working (and you had a much lower chance of ever making it to SPA);
Today, on average, people receive 1 year of state pension for every 2 years of working;
The ‘healthy wealthy’ currently expect to receive state pension for almost twice as many years as the ‘unhealthy poor’ – assuming they both make it to 65;