Response to Call for Advice on the review of Directive 2003/41/EC – Solvency 2

1 November 2011 The European Commission has asked the European Insurance and Occupational Pensions Authority (EIOPA) to review the 2003 European Directive for the activities and supervision of Institutions for Occupational Retirement Provision (IORP) – Solvency 2. The outcome of this process is likely to drive the shape of the UK pensions industry for at least the next ten years and is therefore of vital importance. On 25 October, EIOPA issued a comprehensive paper: “Response to Call for Advice on the review of Directive 2003/41/EC: second consultation” into a consultation period that will run through until 2 January 2012 and…

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Inflation and Defined Benefit Pension schemes

31 October 2011 October saw the release of notably high inflation figures – a two year peak for CPI and a twenty year peak for RPI – coinciding with the setting of pension increases for UK defined benefit pension schemes with September year-end. We provided a brief update at the time of release here but here present a more detailed paper on the direct and indirect impacts of inflation on these schemes. Inflation provides a good example of a crucial factor that affects both sides of the DB scheme balance sheet and our response as pension professionals should therefore bear…

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The Pensions Regulator : Helping trustees understand risks in hybrid pension arrangements

25 October 2011 The Pensions Regulator today published a statement on “Helping trustees understand risks in hybrid pension arrangements”. Based on a survey that the Regulator carried out earlier in 2011, the paper highlights the need for a proper understanding of the characteristics of individual schemes (given the lack of homogeneity in this sector, this is understandable) along with key risks facing trustees: governance, member communications, benefit segregration and calculation, investment risk and provision of statutory retirement options. External link

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National Association of Pension Funds : Performance measurement, attribution and risk ‘made simple’ guide

21 October 2011 Yesterday, at their annual conference in Manchester, the NAPF announced the publication of their new ‘made simple’ guide on performance measurement, attribution and risk. This looks to be a really positive development for trustee understanding : I have to caveat slightly as I haven’t yet read the guide. Risk and performance are now inextricably linked in our minds but the area of performance attribution is often not yet paid as much attention as it deserves. It provides a lot of analytical detail into how and why performance was achieved and lost at both the asset allocation and…

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ONS : UK Inflation Update September 2011

18 October 2011 UK inflation numbers just out from the Office of National Statistics: 12 months to end September 2011: Consumer Price Inflation came in at 5.2% (an increase from 4.5% last month) Retail Price Inflation came in at 5.6% (an increase from 5.2% last month) The figures are high and will form the basis of calculation for DB scheme benefit increases as at end September : compared to 4.2%/5.0% (CPI/RPI) for June and 4.1%/5.3% for March. Schemes calculating benefit increases at the end of December have so far seen prices increase by 3.5%/4.2% for the 2011 year to date,…

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