Pensions Buzz respondents say there are still unanswered questions on GMP equalisation following the High Court decision.
For this week's Pensions Buzz, we asked respondents if they thought there was clarity on guaranteed minimum pension equalisation following the landmark Lloyds Judgment.
We also wanted to know in what range the highest amount withdrawable should be for partial transfers, and if the defined contribution default fund charge cap should include performance fees.
PP further sought to find out who peers thought would better placed to run collective defined contribution schemes, and if there could be a revival of defined benefit in the future.
Just over half of this week's 99 Pensions Buzz respondents did not think there is greater clarity on guaranteed minimum pension (GMP) equalisation following the judgment in the Lloyds case.
In a landmark decision on 26 October, the High Court ruled that GMPs must be equalised between men and women.
One said the principle may be established but "everything else remains unanswered: methodology, preceding buyouts, preceding transfers. The main winners will be the lawyers and the actuaries... plus ça change."
Another said that there is some clarity, but the main questions about method and who will be affected remain.
Meanwhile, less than a third (30%) said the judgment does give clarity. One respondent said there has been clarity for many years. Another noted: "It is a step forward, [but] approximately 20 years too late. However, there are still many steps to go."
Just under a fifth were unsure, with one saying there has been some clarity but "the solutions are complicated and are presumably still open to legal challenge at a future date".
Under half (46%) of respondents said that if partial defined benefit (DB) transfers were introduced to their scheme, the highest amount withdrawable should be in the 26% to 50% range.
One pundit said up to 50% "feels right for a mix and match approach". Another noted: "It depends on the total value obviously! But to have a leftover DB minimum benefit, with the freedom to manage a proportion of it outside the pension scheme could be an optimal solution for many."
Under a quarter (23%) of respondents said the highest amount withdrawable should be between 76% and 99%. One respondent said that this would be suitable as long as there is no additional cost or regulation for the scheme.
Some 16% said the highest amount withdrawable should be 0% to 25%, with one saying it could be higher if the trustee can be "absolutely indemnified against any future claims of misspelling and having to reinstate membership".
Another said not to expect that the partial transfer option could be allowed at all.
Just 15% of pundits said it should be between 51% and 75%.
The majority (60%) of respondents said the defined contribution (DC) default fund charge cap should include performance fees.
Of these, one said it has to include the active management fee and active asset allocation fee so the performance fee should be treated the same. Another commented: "It's a cap, not a target", while one further respondent said "a cap is a cap."
Another respondent noted: "Default funds should be mostly passive investments anyway, so performance fees should be minimal."
However, just under a quarter disagreed. One said: "I still believe that performance fees encourage behaviours, which could be detrimental for DC members."
Another noted that so many default funds are effectively trackers as it is the only option available within a charge cap.
Just 16% were unsure. One respondent was not sure how it would work, while another could see a valid argument both ways. One respondent said: "Including [performance fees] might discourage these which would be a shame but then where do you draw lines regarding which charges are in and which merit being out?"
Under half (45%) of respondents said pension providers would be better placed to run collective defined contribution (CDC) schemes. Of these, one said the value would be the law of large numbers and economies of scale: "Things would need to be standardised."
Another noted that it would depend on the regulatory regime.
Some 29% were unsure as to who would be best placed to run CDC schemes. One said the jury is out, and said: "So far I would see this as being a large fiduciary manager."
Another said it seems a CDC needs a board of trustees, the members of which are defined in the trust document.
Just over a fifth of respondents said insurance companies would be best placed, with one saying it is all about long-term risk pooling and smoothing. "It's an actuarial science requiring robust prudential regulatory oversight."
Just 5% said it should be employers.
An overwhelming majority (72%) did not agree with Pension Protection Fund chief executive Oliver Morley that there could be a revival of defined benefit (DB) in the future.
Some said that employers would not be interested. Another said. "I do not think most employers would ever return to DB, maybe only if dire labour shortages hit particular markets."
One further noted that the DB ship has "sailed, floundered and sunk."
Just over a fifth, however, agreed with Morley. One pundit said: "Once the poor retirement outcomes of the current workforce has been seen, reflecting badly on the employer then a change will occur. However, regulations surrounding DB schemes need to be reduced."
Another said: "No reason why not but would need government to confirm a light touch regulatory regime before it will be trusted again."
Less than one in 10 were unsure. One said that the potential liabilities would dissuade companies from reviving DB schemes.
To see the full results, click here.
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