January 2022

Pensions and demographic risks
14Jan

Pensions and demographic risks

Different demographics of the population experience different pension risks, depending on age, location and various other factors. Read also Pensions in Germany: How the new government plans to solve an age-old issue Also, the fact that the UK population is getting older and living for longer could be viewed as a demographic risk in itself. Read also UK. Double tax whammy risk for big pension withdrawals As Jon Young, financial planner at WealthFlow, says: “Your pension pot has to last for longer and...

January 14, 2022
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14Jan

UK. FCA’s SDR intent welcomed; greenwashing fears remain

The Financial Conduct Authority's (FCA) proposals on sustainability disclosure requirements (SDR) have been welcomed by industry experts, although concerns remain over the need for one "harmonised" and understandable system for all investment products. The regulator previously launched a discussion paper seeking views on the proposed SDRs for asset managers and FCA-regulated asset owners, which aim to “empower” pension scheme trustees to consider climate-related factors in their decision making. Industry organisations have welcomed the FCA’s intention behind the proposals, with Interactive Investor...

January 14, 2022
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Pensions and benefits will not keep up with cost of living, warns think tank
13Jan

Pensions and benefits will not keep up with cost of living, warns think tank

Benefits should rise to match the soaring cost of living as millions face crippling price rises driven by energy bills, a think tank has said. Read also UK. Pensions largest component of household wealth – ONS Many benefits and the state pension are inflation-linked, but - by convention - rates for this year were set before prices started rising rapidly. Read also UK. Parliament moves to ban flat fees on small pots It means most will only go up by 3.1% in April,...

January 13, 2022
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12Jan

UK. Double tax whammy risk for big pension withdrawals

Thousands of people in the UK are at risk of being hit with huge tax bills when they enter drawdown, insurance provider NFU Mutual has warned. The firm analysed data from the Financial Conduct Authority (FCA) showing that in 2020-21 around 15,296 pension pots worth more than £50,000 ($66,144, €58,500) were fully withdrawn. Worryingly, 61.3% of those who cashed out did so without seeking financial advice, up from the 58.9% of the previous year. A similar trend was also registered for pots...

January 12, 2022
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11Jan

UK. Parliament moves to ban flat fees on small pots

The move comes almost exactly a year since the Department for Work and Pensions formally proposed the ban in response to the review of the default fund charge cap. At that time, research from the Pensions Policy Institute estimated that the number of small, deferred pots in master trusts could surge from 8m to 27m by 2035, with the cost to members in fees and other charges reaching £1.2bn, in some cases wiping out small pots entirely. While the industry was...

January 11, 2022
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10Jan

UK. Pensions largest component of household wealth – ONS

Pensions make up more than any other component of total net household wealth at 42 per cent, although inequalities remain within pension provisions, data from the Office for National Statistics (ONS) has revealed. The ONS noted that the proportion of pension wealth has increased over the past 14 years, likely due to the introduction of auto-enrolment, increases to state pension age, and varying defined benefit (DB) pension pot valuations. Retired households were found to be wealthier than those of working age,...

January 10, 2022
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07Jan

UK. Expanding auto-enrolment could cost employers more, experts warn

Proposed legislation expanding auto-enrolment pensions to include thousands more employees, including younger workers and lower earners, could lead to higher costs for employers, experts have warned. A bill was introduced to Parliament yesterday (5 January) that would see the minimum age for auto-enrolment drop from 22 to 18, giving employees an extra four years of savings towards their pensions. The proposal would also scrap the £10,000 minimum earning threshold that currently triggers automatic enrolment, meaning that all workers over 18 would...

January 7, 2022
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07Jan

UK. FTSE 350 DB pension deficit falls by £28bn; ‘looming risks’ ahead

The aggregate accounting deficit of FTSE 350 companies’ defined benefit (DB) pension schemes fell by £28bn during December, ending the year at £76bn, according to Mercer's latest Pensions Risk Survey. It revealed that liability values fell from from £962bn to £913bn during the month, although asset values also declined, from £858bn to £837bn. However, whilst the deficit had fallen compared to November, it had increased year-on-year, with an aggregate deficit of £70bn recorded at the end of 2020 and of £41bn...

January 7, 2022
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06Jan

UK pension risk settlements to see volumes of over £45bn in 2021: Aon

Aon expects the UK pension risk settlement market to see volumes of over £45 billion reported for full-year 2021, making it the third year in a row that it has reached this level. Compared with recent years, the market in the first half of 2021 was relatively subdued with £7.7 billion of bulk annuity deals completed. However, the pace then accelerated in the next six months and Aon expects that there will be close to £30 billion of bulk annuity deals...

January 6, 2022
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06Jan

UK. MP seeks to extend auto-enrolment to 18-year-olds

Proposals that would see working 18-year-olds and low earners automatically save into a pension are being put before parliament this week. Read also UK. Expanding auto-enrolment could cost employers more, experts warn Conservative MP Richard Holden tabled a motion in the House of Commons on Wednesday to extend auto-enrolment in this way. Read also UK. FTSE 350 DB pension deficit falls by £28bn; ‘looming risks’ ahead The proposal looks to boost the pension pots of 18 to 22-year-olds and those who either work...

January 6, 2022
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