UK - Many trustees are unaware their powers will be weakened "significantly" by new requirements for setting funding rates, an independent trustee firm claims.
Capital Cranfield says the Pensions Bill will require trustees to agree on a statement of funding principles and a funding plan with the sponsoring employer. But experts warn the full implications are not fully understood.
Capital Cranfield chairman Richard Malone said that while the requirement to reach agreement was “sensible”, it would lead to a “significant change in the balance of power” for a large minority of schemes where trustees alone currently set contribution rates.
He said: “The government is effectively overwriting trust deeds but many trustees have not yet picked up on this.
“Some trustees who are currently uncomfortable with the increasing levels of responsibility may be secretly relieved that the employer will become part of the decision making process. But for others, independently setting the funding rate is seen as a critical element of their role.”
Law firm Linklaters agreed. Consultant Richard Kandler said: “While the Bill does not explicitly say this, it is very difficult to escape the conclusion that the balance of power will move away from trustees in some schemes. “There is so much uncertainty around where the funding requirement level will be set, this seems to have gone unnoticed.”
The Bill is also expected to increase “dramatically” the number of referrals to the pensions regulator as trustees and employers seek a mediator where an agreement cannot be reached.
Kandler said: “The regulator will find it has its hands extremely full. It is essential it has sufficient resources to cope.”
Females can expect to live a greater number of years in poor health than males, according to data from the Office for National Statistics (ONS) for 2015 to 2017.
Scottish higher-rate taxpayers will benefit from more pensions tax relief than workers on the same salary anywhere else in the UK as income tax bands continue to diverge.
Schemes risk breaking the law and being forced to wind up as The Pensions Regulator (TPR) warns some may be master trusts but do not know so.
As a hectic 2018 draws to an end, Jonathan Stapleton wishes readers a quieter 2019.