PP Online reveals the biggest pensions stories of 2018.
The Department for Work and Pensions (DWP) launched a consultation to "shape future legislation" for collective defined contribution (CDC) schemes.
Launched on 6 November, the consultation is seeking to gather views from across the industry with the aim of ensuring that collective forms of saving will deliver for both employers and employees.
For example, in order to protect the investments of members and to ensure costs are controlled, the DWP is proposing that all CDC pension schemes will be subject to a charge cap of 0.75%, set at the same level as defined contribution (DC) schemes.
Under government proposals, CDC schemes will also be required to undertake annual independent valuations once they have been authorised to ensure that members are protected and schemes are sustainable - with CDC trustees subject to fit and proper persons test.
The chief executive of a packaging company has been convicted of refusing to give information to The Pensions Regulator (TPR) and lambasted for 'intolerable' behaviour towards the watchdog's staff.
The regulator said Thomas Christopher Wrigley - who was both the chief executive and major shareholder of Discovery Flexibles Limited as well as being the chair of trustees for the company's pension scheme - repeatedly refused to comply with TPR's requests for information in connection with an investigation into how the scheme was being run.
TPR had been tipped off by a whistleblower that Wrigley, in his role as chair of trustees, was considering investing more than £1.2m of pension scheme funds in Discovery Flexibles.
The determination notice revealed that, when pushed for a response to its questions by TPR, Wrigley threatened the TPR case manager involved, saying: "If you cross me again I will come after you, personally, with my legal team".
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government confirmed.
Also, company directors could be disqualified and criminally prosecuted where they have been found to have "committed wilful or grossly reckless behaviour in relation to a pension scheme", the Department for Work and Pensions (DWP) confirmed on 19 March.
In its much-anticipated white paper, titled Protecting Defined Benefit Pension Schemes, the DWP said it would work to improve "the effectiveness and efficiency" of TPR's existing anti-avoidance powers while ensuring they do not have "an adverse effect on legitimate business activity and the wider economy".
Thousands of defined benefit (DB) schemes will be forced to amend their scheme rules and equalise guaranteed minimum pensions (GMPs) between men and women, the High Court has ruled.
In a landmark decision on 26 October, the court ruled pensions provided to members who had contracted-out of their scheme must be recalculated to ensure payments reflect the equalisation of normal retirement ages in the 1990s.
However, the court did not set a firm route for the equalisation, noting that a number of methods were available for schemes at large.
For the Lloyds scheme in particular, the bank could require the trustees to consider annual increases by reference to both what members would have received if they were of the opposite sex and the accumulated value of the pension paid to date.
The court also ruled arrears must be paid, with no limitation period effective and interest applied at 1% over the Bank of England base rate.
Marsh & McLennan Companies (MMC), the parent company of Mercer, has agreed to buy JLT for a total of $5.6bn (£4.3bn).
MMC said the acquisition is designed to make MMC a leading global firm in risk, strategy and people, with cost synergies expected to hit $250m within the next three years, with one-time integration costs of approximately $375m.
Under the terms of the deal, MMC will acquire all shares at a value of £19.15 each; based on the 17 September closing price, this represents a 33.7% premium for shareholders.
The deal, which is helped by funding from a £5.2bn bridge loan agreement with Goldman Sachs Bank USA, is expected to complete in spring 2019, subject to regulatory approval and competition clearances.
Hundreds of thousands of people coming up to retirement are at risk of their pension being given to an ex-partner when they die, Royal London research found.
The insurer estimated that some 773,000 people aged between 55 and 64, who are now in second or subsequent relationships, may be affected by this issue.
According to Royal London, the problem arises where people have told a pension scheme they want "any payments after their death to go to a first spouse" but then subsequently divorce, remarry or form a new partnership.
It added ‘expression of wishes' forms are often not updated to reflect "people's changing personal circumstances such as divorce or remarriage," meaning that an ex-partner could be in line to receive pension death benefits.
The Pensions Regulator (TPR) revealed it had a total of 24 meetings with Carillion, and 45 meetings with the trustees since 2008.
This was in response to a Freedom of Information (FOI) request to the pensions watchdog, published on its website on March 7.
The bulk of the meetings with Carillion and the trustees of its 13 defined benefit (DB) schemes were held in 2017.
TPR met with Carillion on 13 occasions last year, and 26 times with the trustees.
This year the watchdog has had four meetings with the trustees, but there are no records of meetings with Carillion business so far.
According to TPR, there may be overlaps where both groups were in attendance at the same meeting.
British Airways (BA) will not have to pay a £12m discretionary benefit its trustees had unilaterally granted, the Court of Appeal ruled.
In its judgment issued on 5 July, the court accepted the airline's arguments that trustees of the Airways Pension Scheme (APS) had acted for an improper purpose when granting the 0.2% discretionary increase in the 2013/14 financial year.
While there was one dissenting judge, the other two judges agreed with BA that the trustees had acted outside of their powers by introducing the power and granting the increase.
Both Lord Justice Lewison and Lord Justice Jackson declared the role of the trustees was to "manage and administer the scheme", as was set out in the scheme's trust deed and rules, and not to design the benefits, noting the trustees had effectively added the role of "paymaster" to their responsibilities.
More than 300,000 pensioners may lose access to their pensions if the UK is unable to agree a Brexit deal, the government conceded.
Both British pensioners living on the continent now with UK-based pensions and those who used to live or work on the continent and have EU pension entitlements could be affected. The loss of arrangement could also impact EU pensioners living in the UK.
The admission comes as the government published the first in a series of papers outlining the possible impacts of a no-deal Brexit, with the banking, insurance and other financial services technical note also anticipating problems for City firms on "day one".
The problem arises due to the UK losing access to the EU's passporting regime in a no-deal scenario, hitting both pension providers and insurers of pension benefits.
Shares in Capita fell by over 40% on the morning of 31 January after the outsourcing firm announced it had suspended its dividend and initiated a multi-year transformation plan.
Shares in the business - which is also one of the UK's largest pension administrators - fell from £3.47 a share to a low of £1.89 before recovering slightly to around £2.00 a share.
In a statement, the firm's chief executive Jonathan Lewis said "significant change" to the business was required.
Capita had a IAS19 pensions deficit of £381m at 30 June 2017 but said it was undertaking a triennial review of its pension scheme - noting its current expectation is the actuarial deficit after this review will be "significantly below" the last disclosed IAS19 deficit number.
BT slashed its pension liabilities by £1.8bn in three months through deficit recovery contributions (DRCs) and a change to the scheme's discount rate.
As of 30 June 2018, the scheme had an IAS 19 accounting deficit of £4.6bn gross of tax (or £3.9bn net of tax), down from £6.4bn (£5.3bn) as at 31 March 2018.
The reduction is despite a £500m "error" in the calculation of liabilities by the company's actuary Willis Towers Watson. In the company's March financial update, the consultancy had erroneously omitted the figure, leading to an understatement of the liabilities.
BT said the mistake represents under 1% of total liabilities, and had no effect on its major financials or the scheme's triennial valuation, cash contributions, or payments.
A Willis Towers Watson spokesperson said the mistake was due to an incorrect application of an assumption.
Defined benefit (DB) schemes are to be offered a new consolidator as the former chief of the Pension Protection Fund (PPF) launched 'The Pension Superfund'.
Alan Rubenstein, who left the lifeboat fund in January, explained The Pension Superfund will be set up as an occupational pension scheme, which will take control over assets and liabilities from incoming schemes.
It differs from DB master trust offerings, such as TPT Retirement Solutions and Deloitte, in that it does not segregate the incoming funds' assets and liabilities.
Speaking to PP, Rubenstein added the consolidator will aim to provide a number of benefits not necessarily available to smaller schemes.
The Universities Superannuation Scheme (USS) is being pressed to ignore advice from a joint expert panel, which would store up problems with "pernicious consequences" for the higher education sector.
Pension experts and economists from the UK, USA, Australia, Canada, Cyprus and the Netherlands warned against heeding the recommendations of the panel, which was set up to end a wave of strikes across the country over plans to end defined benefit (DB) accrual.
In its first report, the expert group, chaired by Joanne Segars, had concluded too much weight had been applied on a self-sufficiency test when conducting the valuation, and there should be a fresh evaluation of risk and necessary contribution rates, with the trustee urged to "consider taking account of expected future investment returns".
However, these suggestions proposed "fundamentally misrepresent the economics of DB pensions".
The British Airways sponsored Airways Pension Scheme (APS) has completed a £4.4bn pensioner bulk annuity buy-in with Legal & General.
The deal - the largest pensioner buy-in ever completed in the UK market - will cover around 60% of the scheme's pensioner liabilities.
The transaction accounts for existing longevity reinsurance contracts of circa £1.7bn that APS entered into via a captive insurer with Canada Life Reinsurance and PartnerRe, which were incorporated into the buy-in arrangement.
Following the completion of the £4.4bn buy-in transaction announced on 13 September, and allowing for previous pensions insurance transactions, APS is now 90% hedged against all longevity risk.
BT has lost a Court of Appeal attempt to swap one section of its defined benefit (DB) pension schemes from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI).
In a judgment handed down on 4 December, the Court of Appeal concurred with a High Court decision, given in January this year, that RPI had not become an inappropriate measure of inflation.
The index is used for uprating and revaluing pensions for pensioner members in Section C of the scheme, but a change is only allowed where the index is deemed inappropriate.
Sections A and B of the scheme were switched to CPI in 2010 alongside public sector schemes and deferred members in Section C. A further cohort of the sections 45,000 members will have been swapped to CPI earlier this year when the scheme closed to future accrual.
The Barnardo's pension scheme has been denied permission to switch the inflationary index it uses for uprating pension benefits in a unanimous judgment from the Supreme Court.
Handed down on 7 November, the ruling refused to allow the scheme to swap from the retail prices index (RPI) to the generally lower consumer prices index (CPI), outlining eight reasons for dismissing the appeal. These mostly related to the exact construction of the scheme's rules.
The case was focused on whether a scheme rule - which said indexation and revaluation must be based on the "general index of retail prices or any replacement adopted by the trustees without prejudicing approval" - gave the trustees discretion to change index.
The Pensions Regulator (TPR) failed to use its powers to force Carillion to pay higher contributions into its schemes despite trustees repeatedly raising concerns over the issue, Robin Ellison has said.
Ellison has been the chairman of Carillion (DB) Pension Trustee Limited, the corporate trustee of six of Carillion's defined benefit schemes.
In a letter to the Work and Pensions Committee chairman Frank Field, Ellison said the trustees of the six schemes had sought to agree higher contributions for the schemes in discussions for each of the 31 December 2008, 31 December 2011 and 31 December 2013 valuations.
However, he said Carillion had made it repeatedly clear in its discussions with trustees that it considered it was constrained in agreeing higher contributions due to constraints in cashflow.
Conduent has announced it is to sell its human resource consulting and actuarial business - the part of the firm formerly known as Buck Consultants - to private equity investor, H.I.G. Capital.
The services firm said the businesses, which represent approximately $278m (£245m) of the company's 2017 revenue, are part of the previously announced plan to divest non-core assets across the company.
As part of the deal, Conduent will retain a number of assets of the firms - including the human resources outsourcing, total benefits outsourcing, BenefitWallet and RightOpt parts of the business.
Conduent HR Services is currently the 10th biggest pensions consulting business in the UK in terms of revenues according to PP analysis of 2016 accounts, with turnover of around £50m.
Xafinity has completed its acquisition of Punter Southall's actuarial consulting, pensions administration and investment consulting businesses.
Admission of nearly 26 million completion shares occurred at 8am on 11 January, following the firm's announcement in December 2017 that the acquisition would go ahead for a combination of cash and shares worth £153m.
As a result, Punter Southall Group has now become the largest single shareholder in Xafinity, which in turn has become the UK's fourth largest consulting firm by revenue.
Punter Southall chief executive officer John Batting and co-founder Jonathan Punter were also appointed to Xafinity's board of directors in December.
The merger will see approximately 900 employees across 15 offices, around 1,000 clients and revenues of over £100m.
Tenders for first-time fiduciary management mandates will be mandatory, must be conducted on a closed basis, and will apply to any mandate for over 20% of a scheme's assets, the Competition and Markets Authority (CMA) has confirmed.
Publishing its final report in its investment consultants market investigation on 12 December, the watchdog said it would also proceed with many of the remedies suggested in its provisional decision, published in July.
The flagship remedy will mean a those fiduciary management mandates appointed without a tender must now put the service out to tender within five years. Some £142bn of defined benefit (DB) scheme assets were in fiduciary management mandates as of June this year, the vast majority of which were appointed without a competitive tender.
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Trustees must be “accountable for the security of data and assets” to protect schemes and members from the risk of cyber attacks, according to The Pensions Regulator (TPR).
In this week's Pensions Buzz, we want to know whether you support the ruling that defined benefit (DB) trustees must equalise GMPs in past transfers.