pmi news - april 2012

[PMIn e w s

[

A P R I L 2 0 1 2

Plus:Controlling costs but at what price?

Who would work in pensions?

Investing in young people

How does the UK rank

in world pensions

administration?

PMI News April mk7_PMI News JULY2 23/03/2012 13:43

[[PMIn e w s

[

contacts+contentsFEATURE ARTICLES

11

16

HEAD OFFICEThe Pensions Management InstitutePMI House, 4 -10 Artillery Lane,London E1 7LS

T: +44 (0)20 7247 1452F: +44 (0)20 7375 0603

MEMBERSHIPT: +44 (0)20 7392 7410E: [email protected]

QUALIFICATIONS/TRUSTEEST: +44 (0)20 7392 7400E: [email protected]

COMMERCIAL DEVELOPMENTT: +44 (0)20 7392 7425E: [email protected]

FINANCET: +44 (0)20 7392 7430E: [email protected]

PMI news teamEDITORIALHolly SheridanT: +44 (0)20 7392 7425E: [email protected]

CORPORATE/DISPLAY ADVERTISINGT: +44 (0)20 7392 7425E: [email protected]

RECRUITMENT ADVERTISINGT: +44 (0)20 7386 1623E: [email protected]

DESIGN S2 design and advertisingT: +44 (0)20 8771 9108E: [email protected]

PRINT Crossprint LtdT: +44 (0)1983 524885E: [email protected]

Published in the UK by The Pensions Management Institute

Available free to PMI members

ISSN 2046-760526

REGULAR ARTICLES

04 Editorial

05 Notes from PMI house

06 Qualifications

10 Events

14 People

14 Letter

15 Expert insight - Automatic enrolment

18 News from the regions

19 Investment insight - Fiduciary Management

24 A month in pensions

29 NEST update

33 Regulator update

35 Services directory

40 Appointments

11 How does the UK rank in world

pensions administration?

16 Controlling costs but at

what price?

20 Who would work in pensions?

26 Investing in young people

31 A penchant for pensions past

WWW.PENSIONS-PMI.ORG.UK PMI NEWS APR 2012 3

CBP0000980903123925


4 PMI NEWS APR 2012 WWW.PENSIONS-PMI.ORG.UK

editorialWhen automatic enrolment finally

commences in October, it will introduce

a new era in workplace pension

provision. By the time the new regime has been

fully implemented, about seven million additional

employees will have become members of workplace

schemes.

The type of scheme used for automatic enrolment

will vary from employer to employer. In many cases,

one of the three Master Trust schemes (NEST, NOW

Pensions or the People’s Pension) will be preferred.

Other employers will prefer the administrative

simplicity offered by a contract-based scheme.

However, in many cases, the scheme will be an

occupational arrangement. A new generation of

trustees will be required to manage schemes. If

members are to enjoy satisfactory retirement

outcomes, there is arguably a greater need than at

any time previously for trustees to demonstrate the

prudent stewardship necessary to ensure efficient

scheme management.

The PMI has been providing services dedicated to

trustees for nearly 20 years. We were the first – and,

to date, only – professional body to offer a formal

examination which offers trustees the chance to

demonstrate the extent of their technical skills. The

Awards in Pension Trusteeship (APT) exist in two

formats: one which covers all aspects of trusteeship

and one which focuses on the specific issues relevant

to defined contribution (DC) arrangements. In both

cases, the syllabus reflects closely that defined by the

Pensions Regulator’s Trustee Knowledge and

Understanding (TKU) requirements. Passing APT

demonstrates a trustee’s technical skills in a clear and

unambiguous way, and represents a logical

progression for any trustee who recently completed

the regulator’s Trustee Toolkit.

The Trustee Group is another PMI initiative that

has played a vital part in promoting high standards.

Members are provided with regular information

about issues affecting scheme governance. This

comes from the provision of PMI News each month

plus discounted rates at PMI’s biannual Trustee

Seminars. These Seminars provide presentations by

highly-respected industry professionals covering a

range of issues, and are designed to ensure that

trustees receive the highest quality information

concerning industry developments. Trustees are also

given the opportunity to network with their peers

and to discuss topics of mutual interest.

Recently, some of you will have seen a survey

designed to help PMI extend the range of services it

offers to Trustee Group members. As trusteeship

becomes an increasingly technical role, the levels of

expertise required by trustees has grown, and there is

an awareness at the PMI of the need to address these

new challenges. Our extensive survey was designed

to establish precisely the concerns and requirements

of trustees so that we can meet them in full. In

particular, we are looking to develop our coverage of

DC-related issues; as the majority of new Qualifying

Schemes will be DC arrangements, it would be

logical for this area to receive greater coverage than

has been the case in the past.

During a period of rapid change within the

industry, it is right that the PMI should ensure that it

continues to offer the best possible range of services

to trustees. We need to know what trustees need by

way of support if they are to manage schemes

effectively. If you have completed our survey – or

have suggested it to a trustee who has – you will

have helped us gather the opinion necessary to help

us achieve this. The Trustee Group has played a major

role in promoting the highest standards of

trusteeship, and we can look forward to seeing it

expand this role in future.

.

Tim Middleton

PMI Technical

Consultant

If members are

to enjoy

satisfactory

retirement

outcomes,

there is

arguably a

greater need

than at any

time previously

for trustees to

demonstrate

the prudent

stewardship

necessary to

ensure

efficient

scheme

management

Supporting trustee development

[ ]n


New and improved PMI TVPMI TV has changed dramatically since it

was launched five years ago with now

more than 1,000 videos showing the latest

interviews, comments and debates.

All media is now available to download

from your desktop, iPAD or iPhone allowing

you to keep up to date whilst you are on

the move.

Visit http://web.asset.tv/pmitv/ to view

a short demo showing you how to get the

best out of PMI TV.

PMI and Capita Hartsheadrecognise greater need forautomatic enrolment support We have entered into a partnership

with Capita Hartshead to offer specialist

support in the area of automatic

enrolment. This follows a recent survey by

the NAPF, which found that a third of

employees eligible for automatic enrolment

will choose to opt-out of the new

arrangement.Visit www.pensions-pmi.org.uk for full details.

TrustSecThis online guide for the Secretary to the

Trustee Board offers:

n unlimited access 24/7

n a wealth of practical information,

precedent documents, and the legal

background behind various aspects of

the role

n anonymous information-sharing and

interactive elements to increase

knowledge and promote best practice

n an excellent guide for someone new

to the role

n an excellent reference tool for those

with more experience

For further details contact [email protected] or 020 7392 7402.

Know your PMI Council

In your opinion what are the threemajor issues affectingthe pensions industry over the next three years?Automatic enrolment, the economy and

possibly Solvency II

If you could change one thing aboutUK pensions what would it be? Review and reduce outmoded legislation

What was your first job? A barmaid

What is your favourite book/film? Jane Eyre and Blade Runner

Describe your perfect weekendStaying in Robin Hoods Bay having dinner

by the fire, then going for a long walk

along the coastal path to Whitby for

lunch then a walk back to Robin Hoods

Bay along the Cinder path, a hot bath and

soak before a slap up meal washed down

with a pint of cider

What do you get out of being a PMICouncil Member? The sense of being able to give something

back and to help develop the education

of pensions people, so we can all do a

better job

What do you keep in your pockets/handbag? Keys, tissues, blackberry, mobile, lipstick,

eye liner, hand cream, mirror, business

cards (sometimes even my own) at least

five pens and paracetamol extra!

Fantastic savingsPMI members have exclusive access to

between 10%-56% discounts at Thorpe

Park, Alton Towers and Chessington World

of Adventures. Log in to PMI Extra via

www.pensions-pmi.org.uk for details.

*Terms and conditions apply. See website for details.

Diploma MembershipDiploma Membership is open to those who

have completed one of our qualifications at

Diploma level. For details see our website.

Members who have obtained at least 220

credits in our qualifications framework or

have completed an equivalent professional

qualification (see the Accredited Prior

Learning section of our website), can

upgrade to Diploma Membership until 31December 2012 under the old criteria.

We are pleased to announce that the

following people have been elected to

Diploma Membership. They are now

entitled to use designatory initials DipPMI:

Timothy Bentley Christine Little

Stephen Blakesley Nicolette Lloyd

Michael Jones Rebecca Smith

Associate MembershipAssociate Membership is open to those

who have completed the Advanced

Diploma in Retirement Provision.

We are delighted to announce that the


Associate Membership. They are now

entitled to use designatory initials APMI:

Mark Beck Gary Rayner

Helina Kuberek Helen Redman

FellowshipFellowship is open to members who have

at least five years Associate Membership

and who have completed at least three

years continuing professional development.

We are pleased to announce that the


Fellowship and are now entitled to use

designatory initials FPMI:

Clare Galbraith Rosemary Kwok

Stephanie Hamilton Joanna Tyler

Victoria Hayter Paul Wilson


pmihousenotes from

Lesley Carline

PMI Council Member


PMI QUALIFICATIONSFRAMEWORK AND CREDITSYSTEM

If you missed the information regarding thisin previous issues of PMI News then visitour website for a copy of the ‘PMIqualifications’ overview brochure. A list offrequently asked questions is also availablethere. If you are currently an AdvancedDiploma Student, the ‘Handbook 2012’which is also on our website has furtherinformation too.

Please note, we are allowing members toupgrade to Diploma Member under the oldcriteria (an accumulation of at least 220credits) until 31 December 2012.

DIPLOMA IN INTERNATIONALEMPLOYEE BENEFITS

In 2012, Module One is offered in Octoberand Module Two is offered this month.

The closing date for October Module Oneexamination entries is Friday 20 July.Further details including an application formcan be found on our website.

RPC

The next public examination takes place thismonth. The closing date has now passed.The autumn public examination takes placeon Monday 15 October. The closing datefor entries is Friday 20 July.

Exams are also available to groups of ten ormore candidates on any date at any UKlocation. If you are interested in arrangingsuch an exam contact David Preston [email protected] or on020 7392 7400. Further details are on ourwebsite where you will also find specimeninteractive questions.

The Retirement Provision Certificate(RPC) also forms Module 101 of ourAdvanced Diploma.

AWARDS IN PENSIONTRUSTEESHIP (APT)EXAMINATIONS

Details for the qualifications including theexamination dates are on our website.

Trustees will now be working through thePension Regulator’s e-learning programmeand we hope that following this, and othertraining and reading provided by theirschemes, they will feel ready to go on to sitthe relevant exam.

Exams can be booked for groups of ten ormore on any date at any UK location. Pleasecontact David Preston at the address belowleft for further details.

We do require further volunteers to assistwith drafting questions. If you think youcould help please contact David.

ADVANCED DIPLOMA

Revision coursesRevision courses were run in Modules 201,202, 203, 204, 205, 301, 302, 304 and RPCin March for the April examinations.

We would like to thank the lecturers andour Study Support Partners in the followingmodules:

Catherine Salafia, Eversheds LLP -Module 202 Paul Niblett, Mercer - Module 203 Elizabeth Debnam, Buck Consultants –Module 205Terry Ritchie, Trustee Solutions Ltd –Module 302

The following individuals also kindly rancourses for us in these modules:

John Eriksson – Module 204Gary Thomas – Module 301Ian Fairweather – Module 304Tim Middleton – RPC and Module 201

We will be running courses for the Octoberexaminations in September. We recommendthat Students attend the revision courses asevidence suggests those who do increase

their chances of passing an examination.Dates, including the order form, will beavailable on our website shortly.

Module 305/2 two day lecturecourseThis popular lecture programme was run inpreparation for the April examinationproviding Students with face-to-face tuitionat the start of the study period and close tothe exam itself. The course consisted of twofull day sessions (one held in December2011 and the other in March 2012), a mockexamination, and feedback throughout thestudy period leading up to the examination.We would like to thank the lecturer, SimonBrimblecombe, for delivering the course.Details of the next course will be availableon our website shortly.

Admission permitsCandidates for the April 2012 RPC, and 200and 300 level examinations should havereceived their admission permit on 2 April.They will contain details of Modulesentered and candidate number as well as thelocation. Instructions to candidates will alsobe sent.

Examination papers 2012As in previous years, candidates will not beallowed to take examination papers awayfrom examination centres. Copies willhowever be available from our website fromthe end of this month.

Examination results Examination results will be posted, first class,to all candidates at the beginning of July.

Distance learning coursesCourses for Modules 201 - 205 and 303, inpreparation for the October 2012examinations, will begin in May. An orderform is available on our website.

RPC and Advanced DiplomaHandbookA copy of the 2013 Handbook will beavailable on our website in June.

Examinations 2011As candidates will be aware, emphasis isgiven to communication skills throughoutthe Advanced Diploma. If you have not


qualificationsPMI News April mk7_PMI News JULY2 23/03/2012 13:43


downloaded a copy of the introductoryCommunication booklet from our websiteplease do so as soon as possible. From 201onwards, a small number of marks areawarded for communication skills so takeparticular note of format, style, tone etc inyour answers. In 304 the mark split isbroadly 50% communication/50% technical.

All examination candidates are required toprovide photo identification for theinvigilators. Passports, national identitycards, photo driving licences and photoemployer identification are all acceptable.

Candidates are reminded that theexaminations are based on the law as itexisted at 6 April 2011. An awareness of anysignificant changes and developments withinthe pensions field after this date will be to thecandidates' advantage. With all the currentchanges and proposals in the pensions field,candidates are reminded to read widely andkeep up to date. Please start by reading all thetechnical material in PMI News.

Board of the Examiners’ ReportThe Board of the Examiners’ Report on theOctober 2011 Advanced Diplomaexaminations is now available to downloadfrom our website.

Module 303/1 lecture course forOctober 2012 examinationThe next two day course will be held inLondon on Monday 9 July and Friday 7September. The booking form is available on our website.

VQs

Final certificate achievementsCongratulations to the following VocationalQualifications (VQ) candidates who haverecently achieved their final certificates.Thank you to the assessors, internal verifiersand centre contacts who have supportedthese candidates.

Qualification in PensionsAdministrationDaniel Heaton Sarah RamsayHelen Lipton

Diploma in Pension CalculationsNeil Newman

Award in Pensions EssentialsJulie ArmitageGrant Bolton-DebbageDavid BryantHai Yin ChanLiam CucksonDinos FearonPaul FungChristopher GardnerHollie GodbehereMarc GriffithsPeter HeyesRachel HirdMark HughsonKatie JacksonKarron KilcranStacey LambCarlos LopezLouise McIntyreDouglas Newton

Certificate in Pensions EssentialsSarah Bamford Shelia MacePeter Capener David PageClaire Hanson Matthew Quine

Certificate in Pension CalculationsGraeme Goodwin Michael Reed

Exam preparation eventsThe following dates have been arranged forpreparation events for the May 2012 exams:

Tuesday 10 April – RetirementsWednesday 11 April – DeathsThursday 12 April – LeaversFriday 13 April – Transfers

Forms are available to download from ourwebsite. If you have any queries contactGrace Green at [email protected]

Unit E ReportThe closing date for entry to the January –June 2012 series is Thursday 31 May.Forms are available to download from ourwebsite. If you have any queries contact LisaGreen at [email protected]

Help with VQ examination markingIf you are interested in helping us with theMay 2012 examination marking contact LisaGreen at the address above.

SPOTLIGHT ON EXAMPREPARATION EVENTSTRAINER

Pam Gay, ACII, FPMI.Pam’s first job after leaving school was in the Pensions Administration Department ofthe Yorkshire Insurance Company. In 1966she gained her ACII in the Life branch ofthe qualification.

From 1966, when the head office moved to York, she worked for various largeconsultancies looking after clients’ pensionsschemes of various sizes and benefitstructures. In 1976, Pam became anAssociate of the PMI.

In 1985 she joined the Tesco PensionsDepartment. She introduced the Qualificationin Pensions Administration to the departmentin 1990 where she was an Assessor and also anInternal Verifier until 2007. Pam became aFellow of the PMI in 1994.

Pam also volunteered as an Examiner, amarker for the Diploma in PensionCalculation Report writing unit since itsinception, and an External Verifier havinggained her D35 in 2001 to add to her D33and VI qualifications.

Pam was also appointed Senior Examiner forthe Retirements Unit until recently in 2009when she began running the ExaminationPreparation Events. She was very pleasedwith the candidates who attended theOctober 2011 events, achieving an overall95% pass rate from the November 2011examinations.

Floyd OrjiMichael PaternoBenjamin PerritonAmanda RandallHamid RazaBrian RendellMatthew RuckCarl StorerKatie TaserIan TerryWayne UnwinZoe VinallLinda WalkerLoretta WalpoleNeil WatfordSarah WilcoxSimon WilkinsonSarah Williams



I n December 2011 Barnett Waddingham launched

the Award in Pensions Essentials (APE) qualification

to staff. When the PMI launched their new suite of

qualifications we were keen to include the APE in the

range of qualifications already on offer.

Within the Pension Administration practice area

we wanted to ensure that all staff relatively new to

pensions as a career began their professional studies

as soon as possible after joining us. The APE provided

us with a set of clear structured aims broken down

into evenly sized units. In addition to just focussing

on new joiners we have been able to adapt the APE

training infrastructure to:

n strengthen existing employees pensions

knowledge

n identify training needs

n encourage non-pension support staff e.g. HR,

secretarial and marketing to gain a recognised

professional qualification

We particularly liked the fact that the PMI were

offering companies the chance to tailor this

qualification to suit their needs and requirements but

at the same time offer a qualification that was

accredited to the PMI and recognised industry wide.

Due to the flexibility offered by the APE, the next

challenge was to decide how best to offer the

qualification to staff.

As a firm with administration services at each of

our seven offices, it was vital that candidates could

access the information online. We decided to set up

an area on our intranet with the necessary

infrastructure to allow our candidates to access all the

study material and questions. The feedback that we

received was that this structure worked well due to

the ease of access and flexibility that it provided.

The qualification consists of five units:

1. Introduction to UK Pensions

2. Disclosure Regulations and Whistleblowing for

Occupational Pension Schemes

3. Occupational Pension Scheme Design, Investments

and Administration

4. Member Benefit Events for defined benefit

Schemes

5. Member Benefit Events for defined contribution

schemes

A set of training notes were written for each unit

incorporating the main aims set by the PMI as the

basis. Multiple choice questions were then written to

complement the notes. These questions were split

into two sections for each unit. The first section tests

the Learning Outcomes set by the PMI. These are the

key areas that PMI expect a candidate to understand

in order to pass the unit. The second group of

questions tests the rest of the unit not covered by the

Learning Outcomes. We felt that it was important

that the whole unit was tested rather than parts of it

to ensure a complete understanding of the topic.

We recommend that the candidates spend two to

three hours reading the notes, which is allowed

during work time, and they are also actively

encouraged to ask for more guidance where needed.

Once the candidate feels ready they are given an

hour to complete the online questions for the unit

and are allowed to refer to the notes. As a guide we

expect the candidate to complete all five units within

six months.

For a new member of our pension administration

team the notes for the APE qualification form part of

their formal induction process.

Since we launched the qualification within Barnett

Waddingham, two members of staff have already

passed the tests and there are many more from

various departments currently working their way

through the units.

One of the first members of staff to pass the

award was Simon Rusling, our Head of Marketing.

He says:

“This qualification is an ideal way to learn the

fundamentals of pensions, particularly for members

of staff who don’t have responsibility for the technical

details on a day to day basis. I feel that having this

grounding provides you with the confidence that you

understand the essentials and can have more

meaningful conversations with the business. I am

already actively encouraging other members of my

team to take the qualification as it will boost their

confidence in working on a variety of pensions issues.

“The flexible manner that Barnett Waddingham

set up the qualification was really helpful too,

because it allowed me to fit the modules around my

busy working calendar which really appealed to me”.

We have found that the APE has supported our

aim of raising the profile of professional qualifications

within our firm and has boosted the morale of our

team by offering staff the opportunity to gain a

recognised qualification backed by the PMI.

Barnett Waddingham launch the APE

Louise Grindley

Pensions

Administrator

Barnett Waddingham

[ ]n

Louise Grindley

pictured with

Vince Linnane


trustees


BACK BY POPULAR DEMAND!

We are pleased to announce that we will berepeating the following PMI TechnicalSeminars in this year:

DATA CLEANSING - GETTINGTHE BEST RESULTS will take place onTuesday 17 April at Pinsent Masons,London. Confirmed topics and speakersinclude:

n The importance of good record-keepingVicky Holmes, Case team leader, DCGovernance and Administration, TPR

n Pension schemes and the Data Protection ActMark Baker, Senior Associate, Pinsent Masons

n Practical steps to achieving effective data cleansingJohn Broker, Director, ITM

Employer streamn Prevention is better than cure

Daniel Taylor, Head of Administration, Premier Pensions Management

n DC isn’t covered – wrongSpeaker to be confirmed

Trustee stream n Data requirements for the future

Lesley Carline, Head of Marketing and Sales, RPMI

n Prevention is better than curePenny Maystone, Director BusinessDevelopment, Capita Hartshead

This event is relevant for those undertakingPMI and Retail Distribution Reviewcontinuing professional development orqualification gap fill.

Visit www.pensions-pmi.org.uk forfurther details or to book your place.

PENSIONS NUTS AND BOLTS willtake place on Wednesday 16 May atSquire Sanders, London. Confirmed topicsand speakers include:

n Setting the sceneSteve Mingle, Isinglass Consulting

n Trusteeship – pension schemes and death in service arrangementsKris Weber, Squire Sanders (UK) LLP

n Design of trust-based occupationalpension schemesAdam Gillespie, Punter Southall

n Investment classesAlex Pocock, Barnett Waddingham LLP

n Funding of occupational pension schemesSimon Taylor, JLT

n Administration and regulationMalcolm McLean, Consultant, BarnettWaddingham LLP

n Contract-based pension arrangements –main characteristicsChris Brown, LEBC Group

n Individual provisionRoger Cooper, Pi Consulting

n Dealing successfully with pensionchangesLaura Sayer, Squire Sanders (UK) LLP

This event is relevant for those undertakingPMI and Retail Distribution Reviewcontinuing professional development orqualification gap fill.

Visit www.pensions-pmi.org.uk forfurther details or to book your place

JUNE PMI TRUSTEE SEMINAR– NEW FORMAT

GETTING YOUR TRUSTEE BOARDTO SPARKLE will take place on Tuesday19 June at America Square ConferenceCentre, London and will be in a new andinnovative format.

Following feedback from members, we havedesigned this event to share ideas and bestpractice through interactive sessions, as wellas including the more traditionalpresentations. Delegates will:

n be presented with a fictional case study –The Diamond Jubilee Pension Scheme -and work as teams to identify andprioritise the major issues that it is facing

n have the opportunity to quiz a numberof experts in different areas in a practicalsetting

n come up with recommendations as towhat the scheme should do next toovercome or limit these issues

The informative sessions of the day include:

n Legal Update – the hot topicsn De-Risking your investment portfolion Practical steps to effective DC

governance n DB funding –why has it been another

difficult year?

We envisage this event to be extremelypopular so to register your interest or findout more contact Victoria Sherriff [email protected] oron 020 7392 7428.

Supported by

DATE FOR YOUR DIARY!

Due to the success of last year's Seminar, wewill be repeating BEST PRACTISE FORCLOSED DB SCHEMES on Tuesday 3July in London. Please note this date in yourdiary. Further details will be announced indue course.


events

DIARY DATESn 2 APRIL 2012

PMI Midlands Group Evening Seminar

n 2 APRIL 2012PMI London Group 201 Revision Session

n 3 APRIL 2012PMI London Group 301 Revision Session

n 17 APRIL 2012 PMI Technical Seminar: Data cleansing - getting the best results

n 16 MAY 2012 PMI Technical Seminar – Pensions Nuts and Bolts

n 19 JUNE 2012 PMI Trustee Seminar - Getting your trustee board to sparkle

n 3 JULY 2012PMI Technical Seminar - Best practise for closed DB schemes

Regional Groups‘ activities shown in italics


How does the UK rank in world pensionsadministration?


The CEM database of pension administration

costs and service levels contains information

on many of the world’s leading pension

funds. The 92 schemes that currently benchmark

pension administration with CEM have a combined

membership of over 33 million. This includes 19

UK schemes with over six million members. The

other schemes in the database are from the world’s

mature pension markets in North America and

Europe in particular.

Whilst the data is skewed to large schemes, and

based on quite a small domestic peer group, it does

tell us a lot about pension administration in the UK

and how it compares. It also reflects the service

experience of a large percentage of UK pension

scheme members.

The data suggests that on average we spend

less than two-thirds of what schemes outside the

UK spend on pensions administration for each

member (after adjusting for scale, membership

mix and the scope and volume of work that each

administration team performs)1.

Why do we compare the way we do?There are a number of factors that influence our

relative cost positioning. Some of the most

important are highlighted in the table:

UK WorldPer Member Impact

Average administration staff costs

per FTE (total compensation) £35,205 £41,634 - £5.00

Accommodation costs per FTE £4,497 £7,906 - £1.40

Weighted Work Volume per FTE £59,607 £81,124 £11.59

(productivity)

IT Spend per Member £2.64 £11.30 - £8.66

1 Currency conversion for the

purpose of our analysis is based

on the OECD’s Purchasing

Power Parity index

In the UK, pension schemes invest less in administration and deliver a more basicservice to members than comparable schemes in the world’s other maturepension markets.

This article considers how pension administration in the UK is different to the restof the world and what it might be like to experience service as a member of apension scheme outside the UK.

John Simmonds

Partner

CEM Benchmarking

t



The staff costs differential is not adjusted for skills or

experience – so the data is not necessarily telling us

that administrators are paid less for equivalent work

in the UK. All the data tells us is that, based on

staff costs alone, UK pension administration costs

should be £5 per member lower than the world

comparator group.

Staff and accommodation costs are clearly

influenced strongly by the local market. So the two

key areas to focus on, where we arguably have

more control, are IT spend and productivity (and the

potential linkage between the two).

CEM measures productivity in terms of the

average work volume produced for each member of

the administration team. Work volume is an

aggregate measure of all the material work of the

pension team including phone calls, emails, letters,

processing leavers and joiners, pension payments

etc. We weight the total volume to reflect a typical

cost for performing each task/process.

Being less productive doesn’t necessarily mean

that administrators outside the UK work harder –

productivity is impacted by a range of factors. One

of those is IT functionality. The accepted thinking is

that if you do more with IT then productivity will

increase and costs will fall.

There is a statistical correlation between IT

functionality and productivity but the numbers

suggest that IT only accounts for about 10% of

differences in productivity - less than might be

expected. Scale impacts productivity just as much

(because larger schemes can organise their staff

more effectively).

We don’t have the data to prove it yet but expect

that other key drivers of productivity will include data

integrity, the volume of regulatory change that teams

have to contend with, error and rework rates etc.

What service experience domembers of overseas pensionschemes have?The UK pensions market focuses heavily on

turnaround times as a measure of administration

success. More recently, accuracy has become

another popular measure. This is a limited

perspective on service that almost certainly doesn’t

reflect a member’s view of the world.

Pension scheme members encounter service

organisations every day and their expectations are

shaped by those interactions. A simple example is

how we are served over the telephone – frustration

grows with menu layers, wait times and contact

centre staff who can answer only basic questions.

We need to be alert to member expectations

with regards service. Timeliness is likely to be well

down the list of priorities and members may have a

(not unreasonable) starting expectation that any

information supplied will be accurate.

However, if pension scheme trustees and

employers focus narrowly on timeliness and error

rates then that is where administrators will direct

their efforts. The net result is that we potentially

neglect wider service issues.

At CEM we believe that what gets measured gets

managed, so we score each participant in the

database for service based on a holistic range of

indicators including availability, choice, outcomes,

flexibility, timeliness, content etc. We do this across

a number of recognisable administrative activities

like setting up pensions, member statements and

telephone calls.

Each scheme is scored out of 100 based on a

sophisticated calculation that has been developed

in consultation with schemes over many years.

Service is defined from a member’s perspective and

to score 100 a scheme needs almost complete

disregard for cost.

The UK administration teams in the database

generally score quite low – suggesting a basic level

of service (see figure 1 right).

Some of the underlying scores are highlighted in

the table below.

UK Avg. World Avg.Score Score

(out of 100) (out of 100)

Telephone 71.1 72.8

Website 21.9 32.5

Printed Communication 30.9 51.5

Pension Set-Ups 83.2 83.0

Pension Estimates 63.0 74.0

Member Statements 32.8 63.6

1-on-1 Meetings 26.3 68.8

Member Presentations 55.0 75.9

Pension Payments 94.6 95.6

Survivor Pensions 52.6 55.7

The UK scores below the rest of the world in almost

every category. If we translate this scoring into

actual experiences, members of pension schemes

outside the UK are:

n more likely to get information across all channels

(i.e. web, phone, face-to-face, written)

n more likely to encounter a call centre

There is a

statistical

correlation

between IT

functionality

and productivity

but the numbers

suggest that IT

only accounts

for about 10%

of differences in

productivity –

less than might

be expected



n less likely to get straight through to a pensions

administrator on the phone

n able to do more directly on the phone (e.g.

getting estimates, changing details etc)

n able to do more online (potentially reflecting part

of the higher IT spend)

n more likely to meet one-to-one with the pensions

team

n likely to experience more structure and choice for

that one-to-one encounter

n more likely to attend a presentation

n likely to receive more targeted communications

n more likely to receive focused requests for

feedback on the service experience

Developing an operational strategyThere is no right or wrong answer about whether

your costs should be high or low. The key question

is: ‘Are you getting value?’.

The value diagram in figure 2 clearly highlights

that UK administration costs are generally low and

reflect a basic level of service. Our lower cost, basic

service model is every bit as valid as the higher cost,

higher service model adopted elsewhere. Both have

their place. Having said this, I suspect that if we

were to give members the choice, they would rather

the UK model if it meant that the savings would go

toward benefit provision instead. (see Figure 2)

What is important however is that boards and/or

sponsors properly consider what sort of service

strategy they want to pursue, have a business plan

and objectives commensurate with that strategy and

a monitoring regime aligned with the objectives.

Understanding where you sit on the value scale is a

first step in that process.

SummaryBy studying pension administration outside the UK

we gain different perspectives and insights. It is

certainly true that overseas schemes tend to do more

for their members – but they spend more in the

process. There is little chance that we will spend

more ourselves in order to match them in the current

climate.

In fact, our own low cost, basic service model

seems intuitively aligned both with this time of

austerity and with the likely priority of our members

in seeing any spare money spent on benefits rather

than service initiatives.

In any event, each trustee and sponsor should

determine a service strategy that is right for its

members and its scheme. Whatever that strategy is,

it should ultimately be implemented in a way that

provides value for money.

KEY MESSAGESn In the UK, schemes invest less in pension

administration than their counterpartsoverseas

n Lower staff costs, accommodation costs andIT spend account for a lot of the difference

n We also deliver a more basic service to ourmembers

n A low cost, basic service strategy is equallyas valid as a high cost, high service strategy

n Each scheme should make a consciousdecision on where it wants to be on the‘value scale’

Figure 2

Figure 1

[ ]n



I n mid 2009 Capita, my employer, announced that

it was organising, with Macmillan Cancer

Support, a trek to the roof of Africa, Kilimanjaro,

the world’s tallest volcano and also the tallest free

standing mountain in the world.

The next six months were a hard slog of walking

up and down just about every hill in the north of

England. However, nothing can prepare you for the

sheer pain, pleasure and absolute exhilaration, of

reaching a summit that is (give or take 100m) 6km

above sea level!

In total, the Capita Group of 40 walkers raised

£186,000 of which I contributed over £5,000. In

September 2010 I spent a week in the French Alps

climbing four summits each in excess of 2,200m

raising a further £2,500 for Macmillan.

They do say that climbing Kilimanjaro can be a

life changing experience and I have succumbed

again to the ‘call of trekking’ and over the weekend

of 12/13 May will be taking part in a 100km (62

mile) walk from Richmond Park on the banks of the

Thames in south London to Brighton on the south

coast. This is a non-stop walk and I have set myself

the target of completing the whole route in less than

24 hours. Whilst not approaching the altitude of

Kilimanjaro or the steep ascents/descents

encountered in the Alps, this walk brings its own

challenges not least it will be furthest I have ever

walked in one go!

My training is well underway and I am already up

to walking 20 miles each Sunday morning. During

April, the training peaks and walks already planned

for that month include Snowdon twice in a day

using four different routes, the Yorkshire three Peaks

and a marathon 15/16 hour trek around Harrogate

and Knaresborough.

As before I am supporting Macmillan Cancer

Research and have been set a minimum target of

raising £375. I should be very grateful for any

donations towards this deserving cause and have set

up a Just Giving page which can be accessed at

http://www.justgiving.com/ClivesL2Bwalk

Clive Wickenden

Client Services

Director

Capita Hartshead

people

I was pleased to read Richard Akroyd’s article in

the February edition concerning mortality

improvements.

As the comment on Richard’s article makes clear,

the question is how much of the improved longevity

is structural, that is, an actual ‘slowing of the ageing

process’, and how much is occasioned by advances

in the medical treatment of illness.

A structural improvement in longevity would be

reflected in an increase over the years in the

recorded maximum span of life.

The Gerontology Research Group has provided us

with verified details of the world’s oldest person

Titleholders back to 1955. The entries appear to

apply to the developed world where accurate birth

dates and death dates have been recorded.

n Ms Betsy Baker, of New England, USA, died on

24 October 1955, at the age of 113 last birthday

n Ms Besse Cooper, also of the United States, and

the current holder of the title, is 115 last birthday

n The previous incumbent, Ms Maria Gomes

Valentin, of Georgia, USA, was 114 last birthday

on her death on 21June 2011

There would appear to be little evidence of any

significant and lasting structural improvement in

longevity since 1955.

Credit for keeping people alive must therefore be

given to the medical services, although some people

may have prolonged their life spans to some extent

by changes in diet and lifestyle.

We in the actuarial profession are often employed

by life offices and pension schemes. We therefore

tend to look at death as an event on which our

employers are liable to pay out, or cease paying out.

We therefore tend to overlook death as a process,

as a culmination of a deterioration in health

throughout life.

Death at age 115 corresponds approximately to a

continuous net deterioration in health of about

4.5% per annum throughout life.

Richard identifies deterioration in longevity with

increased consumption of cheap vodka in Russia and

with obesity.

Undoubtedly, the actuarial profession needs to

have a closer look at the effects of diet upon

structural longevity.

letterIvor Kenna FPMI


If you were to ask: “Who do I have toautomatically enrol?” you might receive theanswer: “All employees over age 22 who earn

more than a certain amount”. While this answer is(very) broadly correct, once you drill down into thedetail of the regulations, things start to becomemuch more complex. Many employers who thoughtit would be easy to identify who should beautomatically enrolled, administer the process andwork out the costs involved have been surprised tofind out that this is not necessarily the case.

While it is easy enough to establish how old anemployee is on any given date, working out whetherthey are ‘eligible jobholders’ on the basis of theirearnings is not so straightforward. The minimumearnings for automatic enrolment is £7,475 a year,(currently under review with a revised figureexpected shortly) and includes some elements ofvariable remuneration as well as basic pay. However,the trigger relates to earnings during any payreference period, which could be weekly, fourweekly, monthly or another variation. Therefore, aweekly paid employee only needs to earn above£143.75 for one week in the year, to becomeeligible for automatic enrolment. For example, anemployee over age 22 earning the NationalMinimum Wage of £6.08 per hour who worked 24or more hours in a week, would become eligible forautomatic enrolment.

This applies even if an employee’s annual incomeis below the earnings trigger. There are variousexamples where spikes in pay could occur, such asextra hours worked, which would take them abovethe threshold and make them eligible. This couldhappen at any time in the year, so employers need toidentify when this occurs and start the automaticenrolment process. Many employers operate acombination of pay periods, so that’s numerousdifferent checks on an ongoing basis.

Then there are the age criteria – jobholdersbetween age 22 and state pension age may need tobe automatically enrolmed. This is a continualprocess, as younger employees will get older andmay become eligible jobholders.

Then there are the contributions …Once eligibility has been established, the next

step is to work out how much to deduct from theemployee and how much the employer’scontribution is. Minimum contributions are basedon a qualifying band of earnings. Therefore,employers need to be able to identify qualifying

earnings, calculate the relevant contributions and beflexible enough to cope with changes. We alreadyknow that minimum contribution rates will changeduring the phasing period, but it is also likely thatsome other factors such as the earnings trigger andpay thresholds will change over time. What if theemployee, or employer, wants to pay more than theminimum? Can existing systems cope with thisdegree of flexibility?

The annual minimum contribution threshold is £5,035 (again currently subject to review).Therefore, the example employee cited above,earning £145.92 (just above the weekly earningstrigger) would have contributions calculated onincome above £96.83 per week. Assuming theminimum starting contribution of 1% employer and 1% employee, this gives a combined weeklycontribution of 98p, which equates to £50.96 over the year.

Many expect employees on this level of earningswill automatically opt out. However, how many willnotice that less than 50p has been deducted and takethe appropriate action to opt out? If they don’t, thescheme has to accommodate such low payments,which will also fluctuate in line with earnings.

In addition to the eligible jobholders, there arenon-eligible and entitled workers. The non eligiblejobholder (those earning below the lower earningsthreshold) can opt into the scheme. If they do, theemployer has to calculate and pay contributions.Entitled workers (those who are both outside thequalifying age range and have earnings below thelower threshold) can decide to join, but don’t haveto benefit from an employer contribution.

The more varied the workforce, the greater thepotential issues. For example, it may be necessary topay contributions to more than one pensionarrangement, such as an occupational scheme, aGroup Personal Pension or NEST. Will employers’systems be able to differentiate what is paid for whoand where? A lot of work has been done to developsolutions to assist employers, so it is important tocheck out what is appropriate for your organisation.

In conclusion, many employers who thoughtautomatic enrolment would be simple and could bedealt with in-house are finding that is not the case.The good news is payroll providers, pension schemeadministrators and other advisers have beenpreparing for automatic enrolment for some yearsnow so there is plenty of help available.


insightAUTOMATIC ENROLMENT

expert

Many employers

who thought

automatic

enrolment

would be simple

and could be

dealt with

in-house are

finding that is

not the case

Phil Daniels

Senior Consultant

Capita Hartshead

Automatic enrolment – do you know who is eligible and when?

[ ]n



F und management fees have always been

contentious but, as the financial crisis took

hold and billions were wiped from global

investment portfolios, more questions were asked

about just what investors were paying for.

However, this preoccupation with the cost ofinvestment rather than value for money is placing

investors in a position of undue risk and could see

them missing out on lucrative opportunities.

There needs instead to be an emphasis on

transparency and a better understanding of how

every pound is spent, rather than a focus on the level

of fees themselves.

By exploring more deeply where high fees arise

and understanding where these costs are distributed,

investors can have a better appreciation of whether

they are receiving value for money.

Recent fee debates in the defined contribution

arena have focused on driving annual management

charges to below 1% since anything over this level is

now seen as ‘expensive’.

However, there are dangers in imposing arbitrary

fee ceilings since they fail to take into account the

plethora of factors that go into creating a successful

investment product.

The primary concern is that total focus on ‘low

cost’ products has the potential to drive investors

towards passive investment products which may not

offer the most appropriate, forward-looking

investment strategies.

Passive products simply track an index and, while

indices are a perfectly good way of understanding

how a market behaved in aggregate and then

evaluating how a manager could have performed,

they are not necessarily a good basis on which to

capture long-term outperformance.

For example, before the financial crisis, banks

comprised a sizable part of the index meaning that

passive investors held large weightings in the

financial sector. These large allocations took no

account of any concerns fund managers may have

had about the problems banks were storing up for

the future since, as index-trackers, they were duty-

bound to invest in these organisations.

After the financial crisis, banks were obviously

weighted lower because their share prices had come

down. So during this period, passive investors

bought banks when they were expensive, continued

to hold them while they became very cheap, and all

the while paid fund manager fees with little to show

for it.

In the bond or fixed income indices, weightings

are based on levels of issuance. For example, in

sovereign debt indices, the countries issuing the

most bonds take the greatest weighting in the index.

Where investors are seeking diversification across

say, the Eurozone, and they opt for a ‘low cost’

passive tracker, their investment will likely be heavily

weighted to just a handful of countries that are

higher risk. For example, Italy accounts for 20% of

Euro government bond benchmarks, yet it is

currently rated mid or low investment grade by

rating agencies. At the same time, passive bond

investors will not have exposure to countries that are

far lower risk such as Norway or Brazil.

This all seems counter-intuitive; not only does this

fail to offer significant diversification benefits, it also

offers a potentially disappointing risk/reward trade off.

Using a benchmark to indicate what you could

have invested in and how it could have performed is

Dean Wetton

Lead Adviser and

Founder

Dean Wetton

Advisory

Controlling costs

Fee debates in

the defined

contribution

arena have

focused on

driving annual

management

charges to

below 1%

but at what price?



a perfectly sensible part of investment strategy, but

it’s not a good way to invest on a forward-looking

basis. However a low fee culture is driving investors

to do just that.

Lower fees do not provide asset managers with

the resources to pay for the necessary ‘added value’

work that can drive return. This includes research to

decide which countries, companies or bond issuers

are more credit-worthy so that you could concentrate

your investment portfolio in those stocks.

By paying more, an investor could have accessed

a fund manager with the resources and skill to work

out that the banks were expensive before the

financial crisis and either not hold as many of them

or at least invest in the less risky institutions.

Lower cost does not necessarily equate to better

value since passive investment may expose investors

to more risk and limit investment returns.

The chart below shows the returns from

Berkshire Hathaway shares, Warren Buffett’s

insurance firm, which have been reduced by

assumed fees of 1%, compared with returns

available from tracking the S&P500 over the last 20

years. There is no doubt that paying fees erodes

return but it can be considerably better value than

simply tracking the performance of the index.

When the markets were at their lowest in

February 2009, investors would have received 2.2%

from the S&P500; had they opted to invest with

Berkshire Hathaway’s would have seen returns of

9% net of assumed fees after 18 years.

The key is value for money; selecting the right

fund manager will ultimately come down to that old

adage ‘you get what you pay for’.

Surely it makes more sense to look at the

investments available on the market and take

account of what is on offer rather than simply how

much it costs? To use a car analogy, you wouldn’t

recommend someone buy a cheap vehicle regardless

of safety, so why buy a cheap fund without

considering risk and return.

A close inspection of fees is healthy and improved

cost transparency is welcome. The National

Association of Pension Funds should be applauded

for highlighting this issue in its November 2011

paper, Making Pension Charges Clearer, and the

organisation is set to launch a working party to

explore the issue in more depth in the spring.

Where it is possible to squeeze costs out, this

should be encouraged. For example, if a client in a

segregated account could get the same investment

strategy in a pooled fund for less, then this is a win

for all as the fund manager has reduced client

service costs and the client has reduced costs.

The key now is to keep the emphasis on value

rather than fees if we are to avoid throwing the baby

out with the bath water by focusing on cost and

cost alone.

Berkshire Hathaway v S&P500 after fees comparison

The key now is

to keep the

emphasis on

value rather

than fees if

we are to avoid

throwing the

baby out with

the bath water

[ ]n



regionsnews from the

NORTH EAST GROUPOur annual pool competition was held at Elbow Rooms in Leeds on 2 February. Thank you to Sagar Wright for their event sponsorshipand congratulations on their team's victory on the night.

Attendees at our 9 February seminarreceived a presentation on liability and longevityrisk management. Thanks to the speakersSteven Rimmer and Abigail Currie Sadie fromTowers Watson.

The annual student seminar was held on 16February. Thanks to Andrew Turnbull, JamesWebster and Clare Wilson for delivering this event.

Our annual 'Question Time' event was held atPinsent Masons in Leeds on 22 March. Thank youto this year’s panel which included Logan Andersonfrom The Pensions Trust, John Hanratty from PinsentMasons, Ted Belmont from Xafinity and Peter Askinsfrom Independent Trustee Services.

If you would like to be included on the NorthEast Region distribution list contact Jane Briggs [email protected]

SOUTHERN GROUPThe early part of 2012 has flown by and inJanuary we gathered to hear Julie Parker-Welch,Reward Manager – Pensions at Marks & Spencerspeak on the challenges of meeting therequirements of automatic enrolment. Thisproved illuminating and the phrase ‘unintendedconsequences’ often came to mind whenlistening to her experiences. Our thanks go toJulie for giving us her views on how best to dealwith the challenges of pension compulsion. Wewould also like to thank Mercer’s for theirhospitality in hosting the event.

The month of February saw us stage anotherdebate but with a much changed line-up.Unfortunately illness deprived us of the servicesof Brian Critchell of Pan Trustees Ltd and a clashof diaries accounted for Kevin Wesbroom andSteve Delo. Consequently it was left to LyndaWhitney of Aon Hewitt and Steve Balmont ofLaw Debenture Trust LLP to fill the void. Threemotions were debated covering the future ofprofessional trusteeship, outlawing pensionsaving for the under 35s and the level of chargeswhich pension savers incur. As hoped for a livelydebate ensued and our two protagonists provedto be evenly matched. Thanks go to Lynda andSteve for stepping into to assist us as well asMNPA for their hospitality.

March saw us reconvene at Baker Tilly inGuildford when James Pinnock and JohnCoulthard of Aon Hewitt addressed us on thetopic of ‘de-risking’. A report on proceedingswill appear in a future issue of PMI News.

MIDLANDS GROUPThe first evening seminar of the year will be heldon Monday 2 April at the offices of Aon Hewittin Birmingham. The subject will be the thornyissue of GMP equalisation. Registration takesplace from 5.30pm.

A revision session was held for PMI Studentson 12 March at the Asquith bar and restaurant.Neil Scott presented a very useful talk on examtechnique, which was followed by a pensions quizand some excellent ‘nibbles’.

Details of the ever popular half-dayconference will be issued to members with abooking form in due course.

If you have friends or colleagues who would like to get further details of PMI MidlandsGroup events please ask them to contact us [email protected]

LONDON GROUP London Group members should have receivedinformation regarding our April business meeting.Details can also be found on the London Regionpage of the PMI website.

We hope students who attended our Marchrevision sessions found them useful. We will beholding the remaining sessions in April, asfollows….

2 April 201 Providing for retirement 3 April 301 Employee compensation

and benefits

If you would like to attend either of these sessionsplease contact our Education Secretary, JoMyerson, at [email protected]

PMI London Group provides a forum foranyone involved or interested in pension provisionto learn, share experiences and socialise. Wewelcome PMI members, Students and non-members alike. Visit the London Region page ofthe PMI website for further details.

EASTERN GROUPOur next event, which is expected to be in June,will be our AGM followed by a talk or debate.Details will be emailed to members in May.

If you have any suggestions for speakers orsubjects for our November half day seminar,contact Susan Eldridge [email protected]

If you wish to be added to our distributionlist, or require any other Eastern Regioninformation, contact Susan at the address above.



insightFIDUCIARY MANAGEMENT

investment

A strong focus on

analysing downside

risk and adherence

to a strict due

diligence process

that covers not

only investment

process but also

legal, compliance,

operational and

risk management

processes is an

integral part of the

selection criteria

Colin English

Head of Business

Development UK

MN

A fiduciary manager’s approach to manager selection

MN is often asked to comment on itsapproach in relation to the issue of‘manager selection’ and what we look for

in an asset manager. Our initial starting position is always to stress that

we do not place prime importance on selecting the‘best’ managers, but place much more emphasis inconstructing the most efficient portfolio ofmanagers within each asset class. In other words, webelieve that although it is important to select fundmanagers who are ‘winners’, we target to build aportfolio of managers within each asset class thatmaximizes the expected net-of-fee return per unitof risk inherent within the overall portfolio. Fromthat basic concept, our approach towards individualmanager selection is based on some key beliefs:n A rational approach to active versus

passive management: if passive managementis feasible in an asset class, then only use activemanagement in proportion to the convictionfelt about the ability of active managers to addvalue after fees and expenses. For example, ifactive management in developed market, largecap equities is thought unlikely to result in netvalue added, then passive management would behighly preferred

n A rational approach to diversification overmanagers and styles: the goal is to constructthe most efficient portfolio of managers in termsof the balance of risk and return. The bestportfolio of managers is unlikely to consist of asingle manager. The number of selected

managers depends on the degree of activemanagement and the expected outperformance,volatility, and correlation of active managers.Diversification across styles and managers is keyto increasing the expected information ratio. Inasset classes with a high dispersion of individualmanager returns (e.g. hedge funds), this canmean diversifying across as many as 30-40managers at any point in time

n Avoiding the ‘lemons’: whilst the aim is toselect outperforming managers, one of the bestways to achieve outperformance is to avoidmanagers that will deliver significantunderperformance. Therefore a strong focus onanalysing downside risk and adherence to astrict due diligence process that covers not onlyinvestment process but also legal, compliance,operational and risk management processes is anintegral part of the selection criteria

n Leveraging purchasing power and scale:size is important. By using the purchasing powerof your clients’ combined assets, you can activelynegotiate fees and terms with external managersin order to maximise the expected net-of-feereturn for our clients

With the above key features as guiding principles, a well proven eight-step selection process is thenfollowed, as illustrated within the chart below.

For more detailed information on any of thepoints raised in this article please contact me [email protected] [ ]n

SOURCING2

SELECTION1 Bottom Up Top down

345

6

7 8

Front office

Operations

Legal

DUE DILIGENCE

Management

Risk Opinion

QUALITATIVE AND QUANTITIVEANALYSIS

APPOINTMENT

PORTFOLIOCONSTRUCTION

MONITORING TERMINATION


20 PMI NEWS MAR 2012 WWW.PENSIONS-PMI.ORG.UK

A s a specialist pensions industry recruiter, we need to keep ahead of client and candidate needs. We

are regularly called upon to provide expert advice supporting clients in identifying an ideal candidate,

providing input into job and person specifications and advising candidates on next career steps. As

part of this we publish an annual Salary Survey*, now in its 10th edition.

Average salariesOver the last three years large salary increases within the industry have not been common practice. Clients and

candidates are still reporting pay freezes, however over 66% of respondents reported receiving pay rises in

2011. 28% reported an increase of between 3-3.9%, however 19% reported an increase of less than 1%.

Who would worMost common themes

respondents commented

on in response to the

question “what are the

major challenges facing

the industry”,

Salary Survey 2011

Pensions Senior Pensions Team Manager / Head Administrator Administrator Leader of Operations

London 18-40k 25-45k 29-48k 40-90k

South East 14-30k 24-42k 28-50k 40-100k

Midlands & SW 14-26k 21-32k 23-37k 35-75k

North 14-24k 16-30k 22-32k 30-60k

Scotland 14-25k 20-27k 21-32k 30-70k

Assistant Pensions Group PensionsPensions Manager Pensions DirectorManager Manager

London 33-70k 60-100k 70-165k 80-250k

South East 30-55k 50-95k 70-140k 80-250k

Midlands & SW 25-45k 44-90k 60-110k 80-250k

North 25-40k 40-70k 42-130k 80-250k

Scotland 30-40k 40-50k 48-85k 80-250k

The numbers of bonus payments reported was a sharp increase on last year, however the average bonus

payment reported had dropped compared to 2010’s survey. We saw a slight decrease in the percentage of

respondents who cited that they felt their salary was in line with the market, from 36% in 2010, to 34.2%

in 2011. This may be a good indicator of the continuing frustration of many who have held back on making

career moves in such uncertain times. Compared to 16.5% in 2010, only 15.2% of respondents said they

had changed jobs in the past 12 months.

* The Salary Survey

2011 attracted more

than 500 responses.



Sarah Bergin-

McCarthy

Director

Sammons Pensions

Recruitment

ork in pensions?Key motivator to change jobClients equally reported the key issue encountered when recruiting was the shortage of

suitably experienced candidates. Second to this again was candidate salary expectations

being out of line with the position on offer. We have continued to see increased salary

offers being made, and more counter-offers being reported.

KEY FINDINGSn Most frequent salary

increase is between 3and 3.9%

n Only 34.2% ofrespondents felt theirsalary is in line with themarket

n Career progression ornew challenge are thereasons most peoplewant to move jobs

n Shortage of suitablyexperienced candidatesis key issue clients facewhen recruiting

n Demand for candidateswith externalaccreditation iscontinuing to increase

n Companies need tofocus on corporate riskof defined benefit (DB)liabilities, which is likelyto lead to moredivergence of the‘Corporate’ and ‘trustee’role. Smaller companiesneed a single personwith this skillset, andthey are rare in themarket

MA

IN M

OTI

VA

TIO

NM

AIN

MO

TIV

ATI

ON

PERCENTAGE OF RESPONDENTS

PERCENTAGE OF RESPONDENTS



Your comments Many respondents wanted to take this opportunity to comment

on the industry and made very interesting and pertinent points

including:n the industry seems swamped by people making headlines out

of short-term issues instead of taking a longer term consideredview of pensions provision. This includes government ministerswho are prone to knee-jerk reactions to particular issues, suchreactions being unhelpful and ill-considered

n unless the pensions industry, in conjunction with government,comes up with solutions to the problems we currently face, thegenerations to come will have to accept a poorer working lifeand old age

n it gets more difficult to demonstrate your value when thescheme is closed to future accrual; you're part of the companylegacy but worth a fortune when you get it right

n I have observed the increasing expectations on definedcontribution (DC) providers where employers are seeking freeadvice rather than going to consultants. The role of a DCprovider is currently not given sufficient profile, e.g. we are notgiven free access to pensions events like scheme consultants.In my view we too represent a plan and in many cases there isnot a consultant involved, this exclusion needs to change

n the final salary pensions industry is reaching its twilight years.Competition is set to intensify and costs will fall. Sponsors andtrustees need to grasp this opportunity and extract the highestquality and largest cost savings. Pensions issues can beovercome through fair negotiations between sponsors andtrustees and with the help of the right advisers. The difficulty isin appreciating what's required and assembling the right teamfor the job

n the pensions world is becoming more impersonal due to moreand more companies outsourcing their pension administration.This also results in a shortage of pensions positions in manygeographical areas as work tends to be concentrated in alimited number of places as determined by the location of the

outsourcing companies. I believe that this means that there are currently high quality pensions professionals who find it is now more difficult to obtain a suitable position within anacceptable distance. It is likely, therefore, that many will leavethe profession

Respondents also commented extensively on the effect of the

forthcoming 2012 workplace pension reform on their company.

Comments varied from those confirming it will have little impact

due to arrangements already in place, through to those facing

major operational and cost impact. Particular issues were around

the major communication project to be managed and paid for,

educating both staff and employer alike, as well as data issues.

ConclusionCompanies need to focus on the corporate risk of DB liabilities,

which is likely to lead to more divergence of the ‘corporate’ and

‘trustee’ role. More Executive Board arrangements can be

expected, with a CEO, CFO, CIO & COO to manage day-to-day

operations of the trustee board. Whether roles are undertaken in-

house, or (typically the trustee role) outsourced, In-house

managers with an understanding of the risks posed by DB

schemes will command a premium. Smaller companies need a

single person with this skillset, and they are few and far between

in the market.

Managing the impact of all this in a continuing harsh economic

climate is incredibly challenging for all those involved with trying

to create and maintain long-term, sustainable pensions provisions.

This is positive news in terms of increased manpower and

expertise requirements in relevant areas. However the need to

continually upskill and maintain continuing professional

development appears to fall on not just employers, but employees

also, whether or not this will result in improved financial reward. [ ]n

Qualifications undertaken

We continue to see demand for candidates who have demonstrable external

accreditation. Each year the Pensions Management Institute’s Advanced Diploma

in Retirement Provision has proven the most common qualification to attain, with

a continuing marked increase in attaining PMI Fellowship (FPMI) status. This strong

commitment to professional development was particularly interesting as only 51%

of respondents reported receiving study support. Study leave varied from 1-7 days

per exam and 75.4% reported that they would not receive an incentive for

completing an exam. Those lucky enough to be entitled to these reported a range

from £50-£750 per exam.

PER

CEN

TAG

E O

F R

ESPO

ND

ENTS



a month inpensions

Bhavna Baines

Technical Support

Analyst

Barnett Waddingham

How much is good governance worth?

Right now, a lot! Why? Because pension schemefinances are being stretched to breaking point due to a‘mark to market’ philosophy which disregardsfundamentals like cash-flow (of both the pensionscheme and that of the sponsor) and other sponsorissues that contribute to its covenant. In our Autumn2011 ‘A month in pensions’ article, Richard Mulcahyfocused on this. This time we focus on a related pointi.e. trustees’ need to make sure that every penny theyspend on fees is money well spent.

A key duty of pension scheme trustees is tomaintain good governance and the pension industrywill be quick to remind them of this. If the constantreminders and pitches of consultants and advisers arenot enough, trustees also have industry regulators andcodes of practice which will also emphasise the primeimportance of good governance.

The result of all this advice and regulation is anever growing checklist of things to do. Trusteemeetings can become swamped by just making suretrustees are doing everything they are told they should

do to meet good governance standards. For biggerschemes with budgets to match all this ‘motherhoodand apple pie’ is manna from heaven for theconsultants involved. For smaller schemes it is merelyanother nail in the coffin.

A truly client-focused adviser will need to remindhis or her client not only of the need for goodgovernance but also of the financial constraints theymust work within. In our view, spending tens ofthousands of pounds on what could become mere tickbox exercises is not money well spent and not goodgovernance.

Good governance must be proportionate.Many smaller schemes are struggling to make their

scheme financially viable and the advisers involvedneed to work with their client to ensure availablebudgets are used wisely. Money should only be spenton things that add value – concentrating onstrengthening the employer covenant, for example,rather than on the latest wheeze in calculatingtechnical provisions.

Good governance is worth a lot and should be ofparamount importance to the trustees. But it is not alicence for consulting firms to print money.

ACTUARIAL

Hamish Wilson

Managing Director

HamishWilson & Co

LLP

The Department for Work and Pensions (DWP) hastruly put the cat among the pigeons by raising thatage-old elephant in the room – equalising GuaranteedMinimum Pensions (GMPs) for men and women.

The proposed methodThe DWP’s possible method relies on a comparisonbetween a member's GMP (under the scheme rulesand the relevant legislation) and their GMP had theybeen of the opposite sex. For any given year, thescheme would pay the higher of:n the amount they would receive under the

scheme rulesn the amount they would have received under

the rules were they of the opposite sex

In addition, schemes would need to consider whenbenefits come into payment. If a member would havebeen entitled to their pension earlier had they been a member of the opposite sex then the pension"should be put into payment at that earlier age".

The obstaclesn Compliance costs could be high in proportion

to member gains. Should trustees bear the total cost of the increased liability or should employershelp out?

n GMPs ceased to accrue on 5 April 1997. Memberswith GMPs may have retired, died, transferred toother schemes, divorced with a pension sharingorder or been bought out with insurers.

n What about buy-out contacts or bulk transfers inor out of the scheme? Did the trustees or employergive or receive any equalisation indemnity?

The challengesn Re-programming computer systems and

procedures with new functionality to process thechanges and to recalculate benefits is complex, timeconsuming and costly

n The DWP’s proposed method requires that themore favourable GMP is provided every time aGMP payment is made. This would requirechecking at least annually and would be furthercomplicated where a member also has pre- and/orpost-Barber GMP

ADMINISTRATIONDWP consultation puts equalisation firmly back on the agenda



LEGAL

Simon Tyler

Legal Director

Pinsent Masons LLP

The Pensions Regulator has banned threeindividuals for life from acting as pension schemetrustees. They were not fit to act as trustees becauseof serious and persistent breaches relating mainly toinvestment decisions.

The regulator identified several failings.By April 2009, almost 87% of the assets of the

Hugh Mackay Retirement Benefits Scheme wereinvested directly in property (including twospeculative property developments). Most of theremaining assets were in property-related investments.Pension schemes are required to invest predominantlyin assets that can be traded on regulated markets.

The scheme, with assets of approximately £49m,had borrowed substantially (about £21m). Pensionscheme trustees can usually borrow only fortemporary cash flow reasons.

Between 2006 and 2009 the scheme had paid thesponsoring employer over £1m for services to thescheme and for commission on the sale andrefinancing of scheme investments. One of thetrustees had a financial interest in two of theproperties the scheme had invested in. The trusteeshad not managed the conflict of interest. Althoughthe relevant trustee had stepped out of the roomwhen his co-trustees took a final decision to buy theproperty, he had been actively involved in alldecisions leading up to the purchase.

The trustees had not kept proper minutes of theirmeetings. This meant it was unclear on what groundsthey had reached their decisions.

The trustees had failed to comply with therequirement to have sufficient knowledge andunderstanding of the law relating to pension schemes.

Scheme funding had suffered as a result of thosefailings. The speculative property investments hadgenerated no return as the developments had notbeen completed. The scheme potentially had an assetworth less than the amount invested, and was havingto pay interest on its substantial borrowings in themeantime.

In December 2009, the regulator appointed anindependent trustee, Pi Consulting (Trustee Services)Limited. The individual trustees remained on thetrustee board, but without power to act, until theyresigned in October 2011.

Bill Galvin, the regulator’s chief executivecommented: “Our investigation in this caseunearthed some of the most worrying examples ofmismanagement of a final salary pension scheme thatwe’ve seen. Typically, the sponsoring employersupports the pension scheme – here the schemeprovided the company’s main source of income”. He added: “The scheme’s finances are in a seriousstate and the Pension Protection Fund will berequired to step in to pay compensation to members”.

DC benefits in hybrid schemes do not haveto be reduced on wind-upThe High Court has told the trustee of two hybridschemes that DC benefits should be paid in full onwind-up. Hybrid schemes are schemes that providebenefits on both a DC (defined contribution) and aDB (defined benefit) basis. The court ruled that,although the trustee had to reduce the DB benefitsunder the statutory priority order because of thescheme deficit, the DC benefits were to be treatedseparately and paid without reduction. This was thecase even though the DC assets were not segregatedfrom the DB assets.

The Singer UK Limited Employee Benefits Planand the Sunley Turrif Pension Scheme were bothhybrid schemes. They had both entered winding up.Neither the statutory priority order nor the schemerules expressly set DC assets to one side before thetrustee set about securing the DB benefits. However,the judge ruled that it would be absurd for DC assetsto be applied for DB members and he interpreted therelevant legislation accordingly.

Pensions Regulator issues warning shot by banning three individualsfrom acting as pension scheme trustees

COMMENTThe regulator has demonstrated that it is willing to acttough when trustees behave improperly. The casehighlights some of the key risk areas: investments,conflicts, record-keeping and trustee knowledge andunderstanding. Banning trustees for life is theregulator’s way of getting other pension schemetrustees and practitioners to sit up and listen. However,trustees shouldn’t be overly alarmed since, as theregulator has acknowledged, the trustees’ investmentpolicy in this case was anything but standard practice.

COMMENTDC members of hybridschemes would have beenalarmed if they hadthought that their DC potscould be used to fund DBliabilities for other schememembers. A previous HighCourt judgment and anOmbudsman decision hadindicated that DC pots inhybrid schemes might beused in this way. Thissensible and pragmaticdecision has fortunatelylaid that ghost to rest.

OpportunitiesThe Government introduced legislation in 2009 toallow schemes to convert GMPs into main schemebenefits. We are not aware of any schemes goingdown this route, largely because of the equalisation

issue. If trustees are going to have to make theseequalisation changes, simplifying the benefit structurenow may be worth considering.

The consultation period ends on 12 April 2012.



The importance of business-education brokerageCareer Academies UK has been building bridges

between the classroom and the boardroom since

2002, working to raise the aspirations of 16 to 19

year olds predominantly in urban areas of social need,

to help them either progress into higher education or

into the workplace with further training.

The Career Academy model is revolutionising

partnerships between employers and teachers,

transforming lives along the way. It recognises the

potential in students from all backgrounds, and helps

them to take their first steps into the world of work.

The model is special in the way it mainstreams

employer support in the young people’s coursework,

through a programme of lectures, workshops, visits,

career mentoring and internships. Many schools and

colleges now run more than one Academy, meeting

the needs of students on different courses with

differing career aspirations. 85% of these students

progress to either university (often the first in their

family) or into employment with further training.

Each Academy is supported by a Local Advisory

Board, made up of leading employers including The

Bank of England, Aviva, Santander, BP, AstraZeneca,

Morgan Stanley, BT and Lloyds Banking Group.

Rob Hawkins, Head of Client Development at

St. James's Place Wealth Management says:

"We first became involved with the programme

purely as a corporate social responsibility initiative, as

it felt like the 'right thing to do'. However, it quickly

became clear that we were experiencing some very

real benefits as a result and that extending our

involvement could only enhance those benefits.

“I chair a Finance Career Academy Local Advisory

Board (CALAB), which gives me and my employer

board member colleagues the opportunity to shape

the profile of the next generation of future

Investing inyoung people

There is a sound case for investing in talented young people: to encourage them to entercareers in business and prepare them for the workplace. As Britain faces its worst economiccrisis since the 1930s it must address the changes happening in its labour market and theeffect these might have on the country’s standing in the global economy.

The challenge for employers, schools and colleges is to help young people in an effectiveand sustainable way. Better practical business education links to ensure that young peoplehave real experience of work improves the talent pool for employers – helping to bridge theskills gap.



James McCreary

Chief Executive

Career Academies UK

Students follow

a rigorous

two-year

programme

alongside a

school or

college

curriculum

equivalent

to at least

three A levels

t

employees, to the benefit of all employers in the

local area.

St James’s Place Wealth Management has entered

into more than 30 mentoring relationships, offered

over 30 paid internships and have employed 12

Academy graduates on a full time basis.

“We are all watching the bottom line given the

current economic climate. However, by the end of

next year we will have saved over £100,000 in

agency and recruitment fees because of this level of

involvement. That's about as real as it gets.

“I would recommend that any employer of any

size gets involved with the programme, as the

benefits of doing so far outweigh the small

investment in time and effort that it takes."

Louise Wilkie, Internal Communication Business

Partner, Prudential speaks of her experience of

working with a student:

“Jamie originally completed a Career Academy

internship with us in the summer of 2010 in the

internal communication department. Our experience

was a positive one and so he returned to work with

us again last summer. Our first experience meant we

were able to identify a project for him to support in

line with his abilities and interests. He was involved

with launching our new intranet working in

partnership with other team members. We have

really seen his confidence grow during his time with

us and he has maintained contact since starting

university in September.”

ProgrammeAcademy students follow a rigorous two-year

programme alongside a school or college curriculum

equivalent to at least three A levels, enabling students

to progress to higher education or employment with

further training. Within this framework, the exact

content of the programme of study is decided locally,

in consultation with Career Academies UK staff. It can

include vocational qualifications such as BTEC or A

levels, as well as the Advanced Diploma, or a

combination of these, depending on local need. All

Academies follow a theme decided by the school or

college in conjunction with Career Academies UK.

These must relate to the student's curriculum and

how it might be applied to the world of work.

Current themes include finance, IT, marketing,

media, law, engineering, applied science and retail,

amongst others.

MentoringPartners in Business (mentors) are employee

volunteers who provide Academy students with one-

to-one support. They range from recent graduates to

managing directors, in both the private and public

sectors. Each partner plays an important role in the

Academy experience, acting as a role model, critical

friend and adviser. Regular meetings – about ten

over 18 months – give the mentor an opportunity to

help the student; reflect on recent coursework;

reinforce classroom learning with real life examples;

expand their understanding of business culture and

workplace etiquette; practice employability skills

such as time management, problem solving, CV

writing or interview techniques; and widen their

network of contacts for the future.

InternshipsAt the heart of the Career Academy experience is a

six-week, paid internship, which takes place in the

summer between the first and second years of the

programme. Students get the chance to experience

the working week in a real operating environment,

doing a job that benefits the employer and putting

into practice what they’ve learnt at school or college.

The internship is key to the success of the

programme; it acts as an incentive during the first

year of study and remotivates them for the second.

As for the host companies, they report that working

with Academy interns helps them deliver their

corporate social responsibility agenda, and enhances

staff development.

Guru lectures, visits and seminarsWhat really makes the Career Academy programme

for students is the range of input they receive from

‘Guru Lecturers’ and employer-led visits and

seminars. These are arranged by individual

Academies in partnership with local employers and

individual volunteers.

n ‘Guru Lecturers’ volunteer to talk to students in

the classroom, sharing expertise to help ground

the curriculum in the real world of work


n Behind-the-scenes workplace tours build young

people’s confidence by welcoming them into

unfamiliar workplace environments

n Employers host one-off seminars, on topics

including corporate social responsibility to

financial law; CV writing and dressing for success

n Regional and national ‘highpoint’ events are

organised centrally by Career Academies UK,

including the annual student event, ‘A Capital

Experience’ which takes place each year in

November

Career Academies UK’s significant expertise lies in

training schools and colleges to forge their own

relationships with employers and manage their

own Academy programme. Their approach, akin

to a franchise, requires schools and colleges to invest

significantly more hard work and commitment than

traditional education business partnerships. But the

impact, on students, teachers and employers alike,

is worth it.

Graduate Sofia “I spent my Career Academy internship at Aviva in

Sheffield as a summer sales adviser. I got an insight

into the organisation, its management structure and

how it differentiates itself from its competitors. I was

trained on equity release products alongside

graduates and my understanding was reinforced by

taking tests and online training. During the internship

I spent time in equity release, protection products and

processing quotes divisions which gave me a broad

understanding of the different functions and roles

performed. I was treated as if I was a full time

employee and had the chance to participate in their

sales support conference in Manchester. In addition,

I was given a project with another intern and we had

to do research and collate findings and then present

it to senior management. We did really well, and the

project we worked on was then implemented. In the

final week I had the opportunity to pick which

department I wanted to work in and I chose

protection products. This was of most interest to me

as the role involved selling and recommending

investment products to financial advisers.

“The whole internship was brilliant. The people at

Aviva were fantastic and definitely worth staying in

touch with. I learnt how to become independent and

I received continuous feedback during the six weeks,

which I acted on to become more confident.”

ConclusionWhat employers are getting is the opportunity to

immerse themselves in the local community which is

becoming central to a company’s social responsibility

commitments. The programme is a ‘two-way process’

as it allows employers to train and develop potential

candidates to join their organisation. It allows them

to spot talent from an early stage which may not

have been possible without the programme.

The Career Academy movement is continuously

growing. For further information, please visit

www.careeracademies.org.uk


The programme is a two-way process as it allows employers to

train and develop potential candidates to join their organisation.

It allows them to spot talent from an early stage which may not

have been possible without the programme

KEY MESSAGESn 2,800 students have graduated from

Career Academies to daten Over 2,500 students are currently on

the programmen 3,000 employee volunteers from 1,000

organisations around the UK contributetime and skills to a Career Academy

n 100% of Academy graduates rate theirlearning experience as good orexcellent

n 99% of Academy school and collegestaff and 97% of Academy graduatesfeel the programme raises aspirations

n 95% of Academy school and collegestaff and 93% of Academy graduatesagree that the programme improvesemployability

* Independent research commissionedfrom FreshMinds, 2010

[ ]n


WWW.PENSIONS-PMI.ORG.UK PMI NEWS MAR 2012 29

If you met your future self today, what’s the onething you hope they would say to you? Thanks forkeeping up the sit ups? You were right to go to

that party after all? Well done for putting some money away?

Behavioural finance tells us that harnessing aconnection to your future self can be a powerful toolin helping us make better decisions to create a ‘bettertomorrow’. It’s an insight we’ve included in our ‘Livesof Brian’ video, where a young ‘Brian’ considers hislot with various versions of his future self as they talkabout pensions. See the video at our YouTube channelhttp://www.youtube.com/user/nestpension#p/u/13/p7JMC3uXl8k

Creating a better tomorrow for millions of futurepensioners is exactly what automatic enrolment isintended to achieve.

Inertia is a powerful behavioural factor and onethat the Government is hoping to harness whenautomatic enrolment starts to be introduced this year.The Government estimates that automatic enrolmentwill mean there will be five to eight million peoplesaving for the first time or saving more in all forms ofworkplace pension schemes.

NEST is one of the schemes employers can use, andwe are keen to engage with ideas that have the potentialto help our members get better retirement outcomes bymaking better decisions about their savings.

So, automatic enrolment takes the first step totackling the problem that millions of people in theUK are not saving for their retirement – by using thepower of inertia to get them started with saving. Itfollows that one of the biggest questions for NEST,and for the other schemes employers can choose toautomatically enrol their workers into, is aboutkeeping people saving.

NEST is working with experts from around theworld to understand how behavioural finance couldhelp our members.

One example of this is how NEST will deal withopt-out. Among other things, our process for opting-out reflects insights from behavioural finance tosupport members in making decisions more likely tobe in their long-term interests.

Techniques tested in this context include what’sknown as loss-framing. People often perceive makingpension contributions as ‘losing’ money from theirsalary. What we’re doing is trying to balance that effectby showing them what they lose if they don’tcontribute. This involves helping enrolled workersunderstand what they stand to lose in terms ofemployer contributions and the Government’scontribution in terms of tax relief if they opt out.

Keeping people saving once enrolled is, of course,absolutely vital to peoples’ retirement incomes.NEST’s own research tells us that our members areparticularly averse to loss and, in fact, may take actionincluding stopping saving altogether in response toexperiencing a loss.

We’ve designed our investment approach for theearliest years of younger members saving with NESTin a way that seeks to get them saving and keep themsaving. Our objective in this, the ‘Foundation’ phase, is to keep pace with inflation after all charges, whilereducing the likelihood of loss.

They won’t stay in this phase for long. As they get used to saving, they’ll be transitioned into morereturn-seeking assets throughout the ‘Growth’ phase,which continues until the member gets closer toretirement.

To further support members to keep saving we alsodraw on behavioural finance to present members withmeaningful information. We break down their potsinto contributions by the members, the employer andtax relief. This is about recognising ‘mental accounting’– individuals attaching different feelings to moneydepending on which mental pot they put it in.

We don’t have all the answers on how to encouragethose members who’ve been automatically enrolledinto a scheme to develop and maintain the savinghabit. Or helping them feel that their enrolment issomething they are part of, not that it is being ‘doneto’ them. However, we’ll continue working withexperts and use experiences from around the world tohelp us help our members get good outcomes when itcomes to their retirement income.

updateNEST

Helen Dean

Managing Director of

Scheme Development

for NEST

Inertia is a

powerful

behavioural

factor and one

the Government

is hoping to

harness when

automatic

enrolment

starts to be

introduced

this year

[ ]n

Why behavioural finance matters to NEST



Malcolm Deering explains as to how he is combining

his interest in one aspect of retirement benefit

provision with the aims of The Pensions Archive Trust.

It was in the early Eighties, when asked to talk to

a group of actuarial students about the history of

pensions, that I began my interest in this aspect of

retirement benefit provision.

Last year I saw a request for a volunteer to work

on identifying sources of pension history in London

so I immediately offered my services. As a result, in

early July I found myself at London Metropolitan

Archives (LMA) meeting Katy Johnson, The Pensions

Archive Trust’s Archivist based at LMA, and Alan

Herbert, Chairman of the Trust.

I discovered that the Trust had been established

to identify and to preserve the wide source of

historical UK pension material that will otherwise be

lost. The purpose is not only to establish a source of

information about the past but also for the

information to serve as a means of learning for the

future. We might not always learn from the past but

it is important that we maintain the ability so to do.

My role is to analyse LMA’s computerised

catalogues of archive collections from past and

present organisations and individuals in Greater

London and to identify records that are related to

pension provision. This might seem to be a ‘boring

task’ but the exercise is fascinating. Indeed, there is

often a danger of being distracted by records

connected and unconnected with pensions.

It is proposed to have articles published from time

to time about the progress of this project and my

findings. A second and important purpose of such

articles will be to inform employers and other

potential depositors of the type of material the

Pensions Archive is interested in collecting, and

encourage them to contribute their records and

knowledge to the Trust. Below is some of the

interesting information, well I find it interesting, that I

have discovered during my weekly visit to LMA, over

the last few months:

Off the RailsOne of the rich sources of information on pension

provision at LMA is the records of the Metropolitan

Railway Company’s Pension Fund. The Metropolitan

Railway Company was one of a plethora of individual

railway companies operating across the UK prior to

nationalisation: in 1933 the company was taken over

by the London Passenger Transport Board, which was

nationalised as the London Transport Executive in 1948.

These records had an added significance for me as I

recall that in the Eighties I saw special rules preserving

the pension basis of early railway workers when two

company clients, which had each purchased British Rail

operations, had to maintain the pre-nationalisation

railway pension basis for employees transferring with

the business for their ongoing service.

CheersAnother good source appears to be the breweries.

The records relate to pension schemes of old small

breweries that were subsequently bought up.

Members of the Campaign for Real Ale might find

the records an interesting source to identify many,

long forgotten small breweries.

Livery (not because of the brewing)

LMA has a section of archives from the City of

London’s Livery Companies, from the Worshipful

Company of Coopers to the Worshipful Company of

Weavers. Some of these provided charitable pensions

in the 18th and 19th centuries to former workers.

These do not constitute ‘occupational pensions’ but

are an important part of our history of provision for

old age. Interestingly, there were also employer

funded pension schemes operated by the livery

companies.

ReliefAnother section in the LMA records relates to Local

Authorities. I had anticipated that there would be

little if anything in these records. However, these

include the records of Boards of Guardians of Poor

Law Unions, which had the direct responsibility for

administering the poor law after reforms to the

system of poor relief in 1834. The records relate to

poor relief, the poorhouse (workhouse might be

more appropriate), asylums and supposed ‘lunatics’,

Board schools, employment (including of children)

and emigration. This is a rich vein of records about

the operation of the poor laws in the 19th century.

Helping the TrustNow, it is time for you to play your part. The Trust is

keen to hear from potential depositors with material

to add to its collections, and to gather information

about historical pension provision by organisations in

the UK. Remember that tomorrow will make today

history. We are looking for both older and more

recent history. The earliest example of UK pension

provision, discovered in my own research was from

1375, when The Guild of St James decided to provide

for “a brother who had fallen into mischief and had

nought for his old age”. If anybody knows of an

earlier UK reference to pension, please advise The

Pensions Archive Trust. Further details can be found

at http://www. pensionsarchive.org/

A penchant for pensions past

Malcolm Deering

Independent Pension

Adviser

[ ]n

The purpose is

not only to

establish a

source of

information

about the past

but also for the

information to

serve as a means

of learning for

the future. We

might not

always learn

from the past

but it is

important that

we maintain the

ability so to do



updateregulator

The Trustee toolkit, The Pension Regulator’s

educational e-learning tool, has been updated and

refreshed. A number of improvements to the

programme went live on 14 March.

This will be good news for over 100,000

individual trustees who manage UK retirement

savings. The role of the trustee is diverse and

complex; whilst there aren’t detailed regulations

relating to the skills and activities that trustees need

to employ, there are certain legalities concerning

minimum levels of knowledge and understanding.

Trustee Knowledge andUnderstanding (TKU)Following the Pensions Act 2004, trustees are required

to have knowledge and understanding of pensions

and trusts as well as the principles of funding

occupational schemes and the investment of scheme

assets. Trustees are also expected to be fully conversant

with their own scheme documents and we would

recommend that they are familiar with trust law.

Under TKU regulations, new trustees have six

months to familiarise themselves with their

responsibilities for their own particular scheme.

Launched in 2006, the Trustee toolkit was designed

to provide trustees with a free and easy-to-use

e-learning programme that would aid them in

meeting the above criteria. The various options

when registering for the toolkit enables trustees to

undertake learning that is appropriate to them and

their scheme.

The toolkit covers each of the items listed in the

scope of knowledge and understanding which are

dealt with in 11 core modules. There are also four

supplementary modules that are not part of the

foundation TKU requirements but are provided to

help trustees in specific circumstances. To find out

what you are required to know you can visit the

Scope Guidance on our website. We have also

provided an index so you can look up related

content on the toolkit:

http://www.thepensionsregulator.gov.uk/docs/tku-index-2009.pdf

The launch of the refreshed toolkit Over the last six years e-learning technology has

improved significantly. With this in mind, alongside

feedback from trustees and other users, we have

made several improvements to the toolkit. As well as

improving user experience we wanted to ensure that

the toolkit remained relevant for the future. We felt

that it was necessary to provide a more up-to date,

engaging learning experience.

Those who saw the recent webinar and took

advantage of the live Q&A will appreciate the new

features of our refreshed toolkit. Amongst many

improvements we have streamlined the registration

process, so that it is easier to set up an account. Upon

registration there are also more choices relating to

scheme size which means that every learner will

benefit from a tailored learning programme.

Among further changes we have made are:

n more user friendly navigation and a clearer

picture of progress towards receiving certificate

of completion

n increased screen size

n refreshed look and feel

n an easier way of working through the learning

to help identify relevant tutorials

n new scheme categories to help tailor learning to

the scheme

n type and size downloadable resources including

a new study planner to study offline

Over the years we have had many requests for hard

copies of the Trustee toolkit so that people can learn

offline or print off particular tutorials to take with

them to board meetings to help them in their role.

We have listened to this feedback and taken the

opportunity to improve the functionality to allow us

to provide downloadable resources which will

include, for example, PDF versions of the tutorials.

Following the launch we will have all four tutorials

from module 1 available as well as a study planner.

We intend to launch further resources each month and

we will communicate new materials via the homepage.

When developing the new toolkit we involved

existing users in reviewing and testing the new look

and feel, including the Association of Member

Nominated Trustees and the feedback received was

resoundingly positive.

Please be reassured that any learning undertaken

prior to the refresh will have been saved and

individual accounts will be intact.

Registering for the Trustee toolkit To register and create an account visit

http://trusteetoolkit.thepensionsregulator.gov.uk/arena/index.cfm

THE TRUSTEE TOOLKIT: HELPING TRUSTEESUNDERSTAND THE REQUIREMENTS OF THEIR ROLE

The toolkit

covers each

of the items

listed in the

scope of

knowledge and

understanding

which are dealt

with in 11

core modules

[ ]n

Susannah Hines

Customer

Propositions Manager

The Pensions

Regulator



directoryservices Booking: Sean MorrisseyT: +44 (0)20 7386 1623E: [email protected]

actuarial + pension consultants


independent trustees

fiduciary management




pensions lawyers

third party administrators

pensions administration systems



trustee services


appointments You can find all these jobs and many more at:

Booking: Sean MorrisseyT: +44 (0)20 7386 1623E: [email protected]

Copy deadline: Friday 13 Aprilfor May issue



# PMI NEWS APR 2012 WWW PENSIONS PMI ORG UK


pmi news - april 2012

Documents

pmi news july2

3cbp0000980903123925pmi

pmi members issn

world pensions administration

uk rank

efficientscheme management

automatic enrolmentwill

type of scheme