Pensions News - Buckconsultants.com

Pensions News – April 2013refunds of contributions from DC schemes for members leaving pensionable service after lessthan two years (from a date still to be decided).The precise details of how this will work, including what is to be considered a “small pot” are stillto be established, and the DWP is seeking to work with the industry to resolve many of theoutstanding issues. As yet, there is no clear idea of when this will come into force, although theDWP has confirmed its desire to “achieve change in this area as soon as practicable”.The DWP had been considering still allowing refunds for what it termed ‘micro pots’, which werefunds regarded as being worth so little that they could neither be managed efficiently nortransferred to another scheme cost-effectively.However, after investigating this option, the Government has decided not to proceed with micropot refunds. It has determined that in practice, refunding a micro pot is more complex than firstappears. This is because of the work involved in separating funds between contributions andtax relief from both employers (which would not be refunded) and employee contributions.7) Solvency II/IORP DirectiveThe Solvency II Directive 2009 is a European Union directive that codifies and harmonises theEU insurance regulation. It is primarily concerned with the capital that insurance companiesmust hold to cover liabilities in the event of insolvency and is scheduled to come into effect on 1January 2014. The EU is consulting on moves to apply similar rules to occupational pensionschemes, in the IORP Directive.Opponents to this suggest the idea is fundamentally flawed as occupational pensions have thebenefit of a sponsor’s support that is absent in the case of insurance.In a speech in June 2012, the EU commissioner responsible for Solvency II announced a delayto the timetable for applying Solvency II rules to UK pension schemes. Revisions to the EU’sDirective on pensions will not now be tabled until the summer of 2013. The previous plan hadbeen to make these revisions by the end of 2012.8) NAPF Annual Survey 2012The NAPF published its 2012 Annual Survey on 28 January 2013. This year’s survey wascompleted by 280 respondents covering 1,018 schemes and covers the full range of workplacepensions on offer. Key findings from this year’s survey include:• 13% of defined benefit (DB) schemes in the private sector remained open to newmembers.• The proportion of DB assets invested in UK equities fell to 9.9%.• 90% of defined contribution (DC) schemes offered a default fund.• Two-thirds of respondents had already decided which pension scheme to use forautomatic-enrolment.12