The Pensions Authority yesterday published its annual review of 2014 giving an overview of activities for 2014 and a forward look for 2015.
One key point to note is the marked shift of members from defined benefit to defined contribution schemes. There was an increase of 21,944 members in defined contribution schemes and a decrease of 27,334 members in defined benefit schemes in the course of 2014.
The report also indicates that the Authority has been very active in the area of prosecutions and investigations of alleged breaches of the Pensions Act.
The Pensions Regulator, Brendan Kennedy, makes a number of interesting comments in the Report, including an indication that he does not believe that a relaxation of the funding standard is warranted by the exceptionally low current bond yield environment. He also indicates that the Authority still believes that defined benefit schemes should dis-invest further in real assets such as equities and increase investments in liability matching assets such as bonds.
The Chairwoman of the Authority, Jane Williams, indicates that proposals will be developed to introduce higher standards for scheme trustees, greater oversight of how schemes are run and a simpler pensions landscape. The Authority reiterates its stated aim of significantly reducing the number of defined contribution schemes. In recognition of the fact that this will require significant changes to the Bysantine and outdated current tax regime for pensions, the Authority indicates that it will seek to identify simplifications to pension rules to make them easier to understand and to remove duplications and anomalies.
Trustees of pension schemes can therefore expect an emphasis on greater governance and oversight from the Pensions Authority this year, and also potentially the introduction of simplifications to the current Revenue landscape. However, the timescale for these simplifications is unclear.
Finally, the Report indicates that the Authority has begun working with the Universal Retirement Savings Working Group, which is the group that has been set up to advise on the introduction of a new supplementary workplace retirement savings scheme. This is the long mooted auto enrolment scheme. However, the likely timeframe for any actual movement to implement such a proposal remains very unclear.