Ike Udechuku’s Post

Well we got there in the end! I first encountered the siren call for structural reform of the various Local Government Pension Schemes (LGPS) in a compelling paper written by Michael Johnson for the Centre for Policy Studies, the publisher of CapX, in 2014. And the opportunities which could be provided by consolidation (of both the LGPS and other pension schemes) were ones I pointed to in papers for the same organisation, looking at how to support high growth businesses and turbocharge levelling up policy. Conservative ministers made it clear they wanted to shrink the number of schemes but it has fallen to Rachel Reeves and Pensions Minister Emma Reynolds to finally bring down the curtain. They should be applauded for doing so. Finally, after a series of missteps and backward steps, we are seeing something which might amount to the beginnings of a growth agenda from the Government (even more pressing after this morning’s quarterly growth figures). Why does this pension reform matter? Principally because scale matters – and that is what these reforms will deliver. There have been some fairly heroic assumptions about how much money could be unlocked by these reforms, but it is abundantly clear that moving from 86 Local Government Pension Schemes to Reeves’ eight ‘megafunds’ will cut down bureaucracy and adviser fees – at least in the long term. And pensions, ultimately, are a long-term play. ✍️Nick King https://lnkd.in/e2aZREv8

Public Pension Fund Expenses and compensation! Is it time for Canadian regulators to be involved by asking more disclosure and transparency just like their Australian counterparts? The Australian Prudential Regulation Authority (APRA) for the first time has just released data showing expenses for pension funds. Indeed, APRA has released in late October its inaugural publication of the fund level data on expenditure covering a broad range of categories, including investment-related expenses, as well as administration and other expenditure, such as advertising, sponsorship and payments to industrial bodies. Part of the regulator’s push for greater transparency, it spans marketing budgets to executive renumeration and will used to help APRA monitor deficient practices and questionable expenditure. It’s the next step in a concerted push by the watchdog to boost scrutiny on the nation’s A$3.9 trillion pensions industry and force funds to spend less when it identifies a clash with members best interests. It adds to the existing annual performance test, which measures funds’ performance and fees and has weeded out poor performing funds. “We said from the outset that we would make this information public to deliver greater access and transparency of how trustees spend and invest members money, at both industry aggregate and fund level,” APRA Deputy Chair Margaret Cole said at an industry conference in Sydney prior to the data’s release. Here in Canada, it is worth noting that Alberta finance minister, Nate Horner, has fired earlier this week the entire AIMCo board and CEO due to lack of appropriate governance and costs control ( including top management compensation)! Ouch! My reaction: Make no mistake, almost all of big Canadian public pensions funds release already a lot of information in their huge annual report. However, we could ask ourselves if our Canadian federal (OSFI) and provincial regulators should be more involved by asking similar transparency with much more details like their Australian counterparts! After all, some of our Canadian public pension funds have succeeded to post impressive annual return (and pay huge performance bonuses) by using leverage (issuing bonds at low rates, thanks to federal or provincial high credit rating)! Bottom line: Time will tell if Federal Finance Minister Chrystia Freeland and her provincial counterparts will follow the path set by Australia by asking to their respective regulator to have a closer look on that « sensitive » file! Food for thought! To have access to the APRA report, click on the link below: https://lnkd.in/ejhjitHC Bureau du surintendant des institutions financières Autorité des marchés financiers (Québec) Ministère des Finances de l'Ontario CPP Investments | Investissements RPC Investissements PSP OMERS Ontario Teachers' Pension Plan Alberta Investment Management Corporation (AIMCo) Caisse de dépôt et placement du Québec (CDPQ)

More DC pension reforms coming, this really does emphasise the need for companies to put in place robust governance structures. Under the plans: - By 2027 DC pension funds across the market will disclose their levels of investment in British businesses, as well as their costs and net investment returns. - Pension funds will be required to publicly compare their performance data against competitor schemes, including at least two schemes managing at least £10 billion in assets. - Schemes performing poorly for savers won’t be allowed to take on new business from employers, with The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) having a full range of intervention powers.

These reforms should help to turn the tide of pension funds exiting UK investments. Visibility & accountability is vital to ensure pension funds focus on delivering for their pensioners and the UK. Comparison of returns is essential - small differences in annual performance makes a massive difference over a long time period. This is currently just for DC schemes, but should be extended to DB as well.

The #AutumnBudget2024 announced that from April 2027, pension funds will be included in estates for Inheritance Tax purposes. Here we delve futher into the potential consequences, drawing on pension funds, gifting, pension nominations and death in service schemes.

“£260bn wiped from valuation of assets in pension schemes.” Apparently… Where has a quarter of a trillion pound gone? Is this a disaster for pension savers? Will we all have to work till we are 140? Well, no. Despite the really alarming headline, if you read the article it is merely pointing to a change in the regulator’s accounting methodology for valuing scheme assets, specifically in defined benefit (final salary) schemes. Actually these schemes remain well placed to meet their long term obligations to members, with an average funding ratio of 123%. So if you are in one of these lovely final salary schemes, rest easy. There’s no panic. But there is a problem. And that is the tendancy of most of the media to cover pensions in a negative and alarming way. Pensions are a tremendous force for good, at both the social and individual level. But people are often scared and confused by them, so trying to fighten people about pensions is actually quite unhelpful and destructive.

Findings from our survey of 160 brokers revealed half are in favour of early access to pension funds for those trying to get their foot on the property ladder. #property #firsttimebuyer #pension #ITC #YourFutureOurFocus https://lnkd.in/ex6AyF-e

🚨 Important Update for AT&T Retirees! 🚨 Starting this August, your pension payments will be managed by Athene instead of AT&T Pension Benefit Plan. This transition affects about 96,000 retirees but does not change your monthly pension amount. Want to understand what this means for your retiree health coverage and the safety of your pension? Dive into the details and what you need to know about private pension safety in our latest article. Stay informed about your financial security! ➡️ https://lnkd.in/gztGSi3n

Our recent freedom of information (FOI) request to the Money and Pensions Service (MaPS) revealed that since the implementation of the DWP’s pension transfer regulations, four in five transfers have been halted for an unknown or potentially low risk reason. Though it's positive that thousands of people have been saved from fraudsters since the introduction of the regulations in November 2021, the industry has repeatedly called for legislative change to prevent these unnecessary delays in pension transfers. Our Head of Retirement Policy, Jonathan Greer: “Change is well overdue. A growing number of people have been negatively impacted as their pension transfers have been needlessly halted for what is often no real reason, yet nothing has been done to help them. “As a matter of urgency, the DWP must act to resolve the current divergence between policy intention and the practical application of the law when it comes to the overseas investments wording to provide clarity on the distinction between those investments that present a scam risk versus those that do not.” Read the full article 👇 Money Marketing

Financial Conduct Authority Progresses Framework for Driving Long-term Value for Workplace Pension Savers Sarah Pritchard, Executive Director of Markets and International at the FCA, said: “16 million people save for their retirement into defined contribution pension schemes. We’re working with the government and the The Pensions Regulator to help them get better returns. “We want to see a focus on long-term value, not just costs and charges. Given the impact these changes could have we are consulting now to ensure that the pension system can be ready to go when the legislative changes that need to happen are ready.”   https://lnkd.in/edxfQuhQ Sheldon Mills Frances Powrie Nisha Arora PensionBee UK Laura Dunn-Sims Rebecca O'Connor FRSA Nausicaa Delfas Andrew Baigent Amanda Moore #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews