There has been a raft of announcements, discussion papers and consultation initiatives affecting the UK pensions environment over the last few months. The RBS Pension Solutions Group highlights the key issues and considers their potential impact on markets and on pensions risk management
Government's deregulatory review
Recent legislation has allowed changes to be made to the minimum level of inflation protection required of defined benefitpension schemes. The Pensions Act 2004 reduced the minimum permitted Retail Prices Index (RPI) indexation cap for pensions in payment from 5% to 2.5% (applied year-on-year). In addition, following the Department for Work and Pensions' consultation exercise in 2007, the government decided to reduce the RPI cap for the revaluation of deferred pensions from 5% to 2.5% (applied over the whole period rather than year-on-year) and to introduce statutory overrides to allow amendments to be made more easily to scheme rules so that these changes can be implemented. In all cases, the change only affects future benefit accrual, not past service benefits, and it seems highly unlikely that the government would risk any attempt to adjust past service benefits.
More on Insurance
Change to definition of unit-linked expenses would increase firms' SCR
Insurers are maintaining their interest in emerging market debt
Insurers are under increasing pressure to plan access to collateral
Changes will prevent stakeholders raising 'red flags' to certain proposals
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.