As the pensions sector says goodbye to Guy Opperman as outgoing Pensions Minister and welcomes the new Secretary of State for Work and Pensions, Chloe Smith, RSM UK says that this is an opportunity for a reset and a review of the plethora of regulatory and economic pressures that are currently faced by trustees.
Ian Bell, Head of Pensions at RSM UK, said: ‘A perfect storm of rocketing inflation, spiralling interest rates and market volatility is making investment strategies extremely challenging. Covenant monitoring is also increasingly difficult and time consuming, given the economic strains that sponsoring employers are facing and the prospects of a forthcoming recession. Before these economic pressures started to bite, defined benefit trustees already faced unprecedented workloads on their agenda due to recent and imminent regulatory changes. A more joined up approach, considering all the changes and challenges, is urgently needed to ease the pressure on trustees.’
Recent and imminent changes from various regulatory bodies include:
- Preparations for the new Pensions Dashboard, launching in 2023
- Introduction of the Single Code of Practice predicted for later this year
- The defined benefit funding framework
- New notifiable events regime
- TCFD (Taskforce on Climate-related Disclosures) and ESG (Environment, Social, Governance)
- Changes to normal pension age
- Simpler annual benefits statements
- Stronger nudge guidance
- New transfer regulations
- GMP (Guaranteed Minimum Pension) equalisation
Ian Bell continues: ‘With so much new regulation either launching recently or looming large, pension trustees have had a lot to cope with this year, and as a trustee myself, I can see the pressure they are under from both sides of the fence. Add to this the current economic pressures and it’s clear that trustees are being placed under immense strain. The government and the industry does not seem to be taking a joined-up approach to this issue, and there appears to be little consideration for how much additional work these changes will create for trustees, both now and in the coming years. We therefore ask the new Pensions Minister and the Secretary of State for Work and Pensions to be mindful of the pressures pension trustees are under and to reconsider some of the intended timelines, particularly for smaller schemes with limited governance budgets.’
