Category Archives: Pensions

People still unsure about auto enrolment scheme

Posted on 4 December 2012 | Leave a comment

According to a survey carried out by Corporate Benefits at Friends Life, 26% of people would choose to opt out of a workplace pension scheme. The survey also found that 35% of those who did enrol would be unwilling to contribute any more than 5% of their monthly salary. This is despite only 14% of recipients thinking that saving 8% (the total level auto enrolment will reach) would provide for a comfortable retirement.

20% of those questioned said that they would not persuaded as even a 1% deduction could mean that they would struggle to make ends meet.  However, 41% said increased tax relief would encourage them to save more for retirement.

“Unfortunately, as people are struggling financially in the tough economic climate, they are understandably focusing on paying the bills today rather than providing for the future,” comments Dr Geraldine Kaye of GAAPS Actuarial.

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Survey looks at UK life and pension choices for new generation of customers.

Posted on 22 November 2012 | Leave a comment

Research by Cable&Wireless Worldwide has found that 90% of consumers express some dissatisfaction with the methods of communications from UK financial services providers.

Almost half would like more comprehensive websites which include video explanations and calculators, and17% of those asked wanted an instant message service whilst using the site. With younger consumers looking for more interactivity from providers, insurance providers need to respond to accommodate these needs or risk alienating future customers.

Nicola Dicks, director, General Insurance, Life & Pensions at Cable & Wireless Worldwide comments “Running multiple communication channels is simply not good enough if the customer experience is poor and disjointed, that’s why it’s vital for insurance providers to improve existing communication channels before rushing to invest in new ones. To engage with and retain their customers, insurers should be providing the right information and advice at first point of contact, whatever method that is.”

“Whilst at the moment technology leadership is strongest amongst younger customers, communications requirements will continue to shift as generations move through different life stages. Insurers therefore need to make sure they get their communication channels right–or they could find themselves restricted to a diminishing segment. Improving communications infrastructure will have a fundamental role to play in delivering the transformation required.”

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Posted in Canada, Insights, news, Pensions, Trends, UK, Video

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Jane Curtis, Immediate Past President of the Institute and Faculty of Actuaries comments on the introduction of auto-enrolment in the UK

Posted on 28 October 2012 | Leave a comment

After the recent introduction of auto enrolment a system which could see up to 11 million workers automatically enrolled into a workplace pension, Jane Curtis President of the Institute and Faculty of Actuaries  comments on the  ‘positive step’ to encourage people to save for their retirement

“Auto-enrolment is a positive step forward in the battle to encourage individuals to save for their retirement. However by effectively helping individuals to save without realising it there is the danger that they may sleepwalk into retirement without enough money in their pension pot to fund the lifestyles that they want to maintain when they leave work.

“To illustrate this; the minimum contribution for NEST will be 8% per year by 2018.  For an individual earning £20,000 a year and assuming a 5% employee and 3% employer contribution for 20 years the NEST calculator assumes that the pension pot will be worth £47,000 in today’s money, which equates to a tax free lump sum on retirement of £11,700 and an annual income for the rest of life of £1,600. Adding this to the present basic state pension of just under £6,000 a year and someone earning £20,000 a year would experience a significant 65% drop in annual income.

“Of course there are many factors that will affect the value of an individual’s pension pot over time, but what these figures illustrate is that it is as important for each individual to be engaged in saving for their future as it is to automatically enrol them into doing so. This is a communication and education challenge for both the Government and employers and one where the expertise of the architects of pension products, such as actuaries, will have a key role to play.”

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Posted in news, Pensions, UK

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45% have never reviewed their pension

Posted on 26 September 2012 | Leave a comment

45% of the working population have never reviewed their pension plans and 41% were unsure if they had selected the ‘default’ option.

The survey by Baring Asset Management, also found that more people were likely to choose friends and family for pensions advice than in previous years. 23% named this as their most likely source of advice, compared with 15% in 2011.  However, 34% selected professional advice from financial advisers or accountants as their preferred option.

Marino Valensise, Barings’ chief investment officer said: “Millions of people may be exposed to poor asset allocation and inappropriate levels of risk due to a refusal to review their pension investments regularly and with the correct levels of advice. This is more important than ever given the current volatile economic environment.”

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Research highlights poor pension knowledge – and advice is more important than ever

Posted on 19 September 2012 | Leave a comment

The 2012 Workplace Pensions Report has revealed that 52% of all employees have no knowledge of the new auto enrolment legislation which will affect 19 million workers.

The new reform will be implemented in October 2012 and will then be rolled out over the next five years in order to raise awareness.  The Department for Work and Pension will be putting out a national campaign later this month. The new legislation will see all qualifying workers enrolled in a workplace pension saving scheme – unless they opt-out.

The report found that 74% of respondents believed that their employer should provide information about retirement planning. Scottish Widows said the services of an expert adviser “would help increase education and understanding of savings, and help employees plan better for their retirement.”

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Posted in Insights, news, Pensions, UK

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The consequences of living longer – the 2011 Census

Posted on 17 August 2012 | Leave a comment

We all know that people are living longer, which impacts on many areas of welfare, society  and finance.  Fraser Smart, Managing Director of Buck Consultants, discusses the data from the 2011 census:

“Much of what this data reveals should come as no surprise to those of us in the pensions industry, people in England and Wales are living longer than they did 100 years ago. There is a decreasing proportion of the population that is aged under 15 and an increasing proportion that is aged 65 and over. The percentage of residents aged 65 and over was the highest seen in any census at 16.4 per cent, which means that one in six people in the population was 65 and over in 2011. In 1911, the figure was one in twenty.

“Very worryingly the number of active members of occupational pension schemes is at the lowest level since the 1950s. Employee membership of employer-sponsored pensions in the private sector fell from 46% in 1997 to 32% in 2011. In 2010 the average worker in a private sector defined benefit pension scheme contributed 5.1% of salary to their pension, compared with 2.7% for employees in defined contribution occupational pension arrangements.

“Great news we are all living longer, as no doubt we all wished for. However, this has now come to the attention of those in authority and, with an ever increasing percentage of the population relying on pension income. We are awaiting with interest the Government’s proposals on defined ambition pensions which are expected later this year. Radical reform of pensions arrangements are needed to meet the needs of a growing population of pensioners in the wake of the disappearance of final salary pension schemes.

“I would love final salary schemes to make a comeback, but the reality are that most are in their endgame paying out benefits rather than accruing new liabilities. Will the Government be brave enough to remove the shackles which led to a large extent to the disappearance of final salary schemes? We will have to wait and see.”

 

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Posted in Life, Pensions

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Actuaries and the Law

Posted on 27 June 2012 | Leave a comment

The programme for this year’s annual seminar on the legal developments in the pension industry that takes place in September has been released.

The seminar will take place on 13 September 9:30 to 16:15 with registration 09:30 – 10:00. The seminar will provide some insights into the recent developments, in what has been a year of major change for the pensions industry.

James Rickards from Outer Temple Chamber will be leading the session on current Case Law exploring:

•the complexities of Statutory Employer

•how Section 75 debts and Flexible Apportionment Arrangements may impact on advice to client

•helping to protect yourself against professional negligence

•how to protect yourself in cyberspace reflecting the changing world in which advice is given

The Event will take place at Staple Inn and if you book before 16 August you will be entitled to an early bird discount. After this date the cost will be as follows:

Members: £345.00 Non-members: £445.00

A limited number of bursary places are available for those who are not in remunerative employment, or who work within a university. A group discount of 10% is available for six or more attendees from the same company booking at once. Please contact 0207 632 1498 for more information.

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Posted in Actuarial Qualifications, Careers Events, Events, news, Pensions

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Industry ‘must take the lead to reinvigorate saving’

Posted on 24 June 2012 | Leave a comment

The retirement savings industry should take the lead in reinvigorating Britain’s savings culture by setting up a mandatory annuities ‘clearing house’ and a service for grouping small pension pots, said the Centre for Policy Studies.

‘The Open Market Option which allows retirees to shop around for the best annuity rate, is widely regarded as a failure,’ it said. ‘This paper proposes that the exercise of the OMO should be made mandatory, achieved via an annuities clearing house; essentially, a marketplace in which all annuity providers participate.’

All annuity contracts would be standardised and, due to the small scale of average defined contribution pension pots being sold as annuities (£25,000 on average) they would be aggregated before being sold to increase the number of potential purchasers, and therefore increase the change of getting a better deal.

Pensions providers should also work together to drive the process of pot consolidation by establishing an industry-wide DC pot consolidation service.

According the report, this ‘BACs for pensions’ clearing house would benefit customers and providers alike by reducing the cost of administering the millions of small pension pots built up by people moving around employers and helping savers to maximise their retirement income.

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Pension gender gap ‘shrinking but still significant’

Posted on 7 June 2012 | Leave a comment

Women retiring this year are expecting their annual retirement income to be a third lower then their male counterparts.

Research by Prudential found that the average woman retiring this year expects an annual income of £12,250 in retirement, including private, company and state pension, compared to an average expected income of £18,000 for men.

A gender gap of £5,750, last year’s figure was £6,500 meaning that the gap in expected incomes has narrowed steadily since Prudential first measured a gap of £6,642 in 2009. Prudential said the narrowing of the gap could mainly be attributed to a reduction in men’s expected incomes. For this year’s retirees as a whole, the average amount people expect to retire on fell to a five-year low of £15,500, compared to £16,600 in 2011.

Vince Smith-Hughes, Prudential’s retirement income expert, said: ‘The pension gender gap appears to be narrowing but there is still a long way to go. Not only does the gap remain stubbornly wide, but anticipated retirement incomes have this year hit a five year low for both men and women.’

‘The practical steps that women can take to improve their retirement income prospects include maintaining pension contributions during career breaks and, if possible, making voluntary National Insurance contributions after returning to work.’

The survey also found that 49% of women believe they will not have enough for a comfortable retirement, compared to 40% of men.

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Posted in news, Pensions, UK

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Actuaries promoted to partner at Hymans Robertson

Posted on 28 May 2012 | Leave a comment

Three actuaries were among a group of seven members of the Hymans Robertson team to be promoted to partner last week.

They include Mark Jaffray, who qualified as an actuary in 1998. He joined Hymans Robertson’s Glasgow office as an investment consultant and specialises in providing advice to defined contribution pension schemes.

In particular, his work includes helping clients who are preparing to implement auto-enrolment schemes.

Barry McKay qualified as an actuary in 2006. He first joined Hymans Robertson in 1996 and, after a brief break travelling, rejoined the company in 2005. He works as an actuary in the firm’s public sector team and most recently has been heavily involved in helping clients to deal with public sector pension reform. He is also helping to develop the consultancy’s online presence.

Calum Cooper qualified as an actuary in 2007, joining Hymans Robertson in 2003 as an actuarial trainee. He is now a scheme actuary working out of the firm’s Glasgow office. As lead consultant for a range of private sector pension schemes, he works with companies and trustees to help them develop risk management strategies.

He specialises in funding strategy, flexible income drawdown, benefit flexibility and risk management opportunities.

Finance and operations director Nick Pope has also been promoted to partner, and so has head of coaching and development, Monica Smith.

All at Gaaps with them will in their new roles within the company.

Ronnie Bowe, senior partner at Hymans Robertson, welcomed the appointments, which take the number of partners at the firm to 63.

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Posted in Actuarial Sectors, Pensions, Property and Casualty / Non-Life / General

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