News

An alternative, alternative approach

After a 12 month search, Saul, the £1.3bn
University of London defined benefit pension
scheme has made its foray into alternatives by
investing £100m in a single alternatives
package that gives it exposure to a wide range
of alternative assets as well as providing the
requisite strategic and tactical asset allocation
and manager selection.
It is reported that Saul could ultimately raise its
alternatives allocation to 25%.

High Court decision forces DWP rethink

John Hutton, the Work and Pensions Secretary,
is to revisit the Financial Assistance Scheme
following the High Court's finding that the
government was guilty of misleading
occupational pension scheme members into
believing that their pensions were safe. 75,000
victims of collapsed pension schemes stand to
benefit from the DWP's proposals. John Ralfe,
a prominent pensions consultant, has estimated
that if benefits are uplifted to a level
commensurate to that offered by the Pension
Protection Fund (PPF), the present value of this
compensation should amount to less than £2bn.

Lies, damn lies and statistics

Whilst Lloyds TSB last year announced an
actuarial pension scheme deficit of £1.1bn for
2005, a recent review commissioned, by the
staff union and conducted by a rival
consultancy, concluded that the deficit based
on more prudent assumptions was nearer £3bn.

Royal Mail posts a £6.6bn deficit

The Royal Mail is set to close its final salary
scheme to new entrants before the end of the
year, as the scheme deficit escalated to £6.6bn.
A dramatic fall in the company's profits, caused
by the spiralling servicing costs of this funded
scheme, with its membership of 163,000, is to
blame for the closure.

The cult of the equity is alive and well

Despite the conventional wisdom for pension
schemes to move from equities to bonds, it
would appear that only UK schemes have been
de-risking their portfolios. According to Watson
Wyatt, the trend within other major pensions
markets has been towards increased equity
allocations.

Breaking up is hard to do

HM Revenue and Customs will start to apply
tax and national insurance contributions (NICS)
to cash inducements or enhanced transfer
values made to employees as an incentive to
transfer out of final salary pension schemes.
Only extra payments made into the transfer
scheme avoid tax and NICS.

Local authority funds forced to reveal all

Local authority pension funds will be forced,
under the Freedom of Information Act, to
disclose details of their pension scheme
investments. Until now, local authorities have
claimed that their agreements with fund
managers are confidential. However, the
Information Commissioner maintains "there is a
clear public interest in the general public being
able to scrutinise [a] council's investment
strategies."

How low can you go?

According to Watson Wyatt, the collective FRS
17 deficit of FTSE 100 companies fell to £31.8bn in January: the lowest since records began. However, many FRS 17 deficits still
don't fully take into account the recent dramatic improvements in longevity.