Pensions overview of the month

By Sara Neidle

As the world looks on in horror at the tragic events taking place in Ukraine, we are already seeing the economic, social, and human impact of the crisis as the situation continues to develop. As a result, several questions have arisen as the world decides how they will best respond.

With new sanctions now being imposed by other countries, we are seeing the impact this will have on big financial institutions due the very nature of global trade, and the financial relationships between asset owners, banks, pension funds and the like, who have links to Russia.

Several pension schemes and financial institutions including BT Pension Scheme, Universities Superannuation Scheme, are already cutting investments or reducing their exposure in Russia linked assets and securities, as institutions analyse and reassess their investments. But it begs the question how far should they go? This is where the ‘G’ in ESG comes into play for these big institutions, to act responsibly and morally do the right thing for its investors and Scheme members, and at the same time, need to ensure that the Trustee is acting in members best interest trustees’ ensuring that divestments do not substantially harm investment performance.

In February, SEC Newgate Insights showed yet again State Pensions, followed by ESG dominate the news agenda across the pensions industry. This month, we saw GMP Equalisation with the greatest increase in volume of mentions over the past two months, with the news about Buck’s completion of a GMP equalisation project for the Vaillant Group Pension Scheme. As well as the DWP confirming that legislation to reduce the fixed rate of GMP for early leavers from 3.5 per cent to 3.25 per cent per annum will be introduced to Parliament from 6 April 2022.

Other key highlights this month, included the Government confirming that the minimum earnings level for automatic enrolment (AE) into a workplace pension scheme will remain at £10,000 for 2022/23, while the lower earnings limit will be frozen for the first time. This will result in an additional 17,000 savers into AE pension schemes as average earnings rise, as well as earning between £6,240 and £50,270 will qualify. This is good news as it will mean more employees will be able to benefit from employer contributions as well as slightly increasing personal pension contributions.

Moreover, as we long for the forever launch of the pensions dashboard, the Financial Conduct Authority (FCA) launch a consultation on requirements for pension providers ahead of the launch of pensions dashboards, highlighting provider compliance as ‘an essential component’. It’s one step closer to making the dashboard a reality!

If you would like any specific communications advice relating to any of these issues, do get in touch.