Financial Services, Pensions, Investments & Savings - September 2010

Business cannot afford to act as administrator for pensions reforms, says BCC
On 6 September 2010, the British Chambers of Commerce (BCC) published a hard-hitting new report, which highlights a number of business concerns with looming pensions' reforms. Research was carried out to uncover the impact that the Pensions Act 2008 will have on business and the UK economy when it is implemented between 2012 and 2016. Four key problem areas for business were identified:

  1. Competition: A small firm staged in for auto-enrolment 12 months before another small firm that it actively competes with, will face approximately £960 more in contribution costs than the firm that is staged later.
  2. Pension Scheme Administration: The vast amount of administration that businesses will have to deal with will include both one-off set-up processes and recurring paperwork. The BCC recommends that employees should not be auto-enrolled into a pension scheme until their thirteenth week of employment.
  3. The Employment Relationship: A recurring concern was how the reforms would affect the relationship between employer and employee. The problems that auto-enrolment will cause are aggravated by the requirement to re-enroll employees every three years.
  4. Risks to the employer generated by the Pension Act 2008 obligations: New employment obligations will always create a new route for vexatious employees to make claims against businesses; new areas for well meaning businesses to get it wrong; and, opportunities for unscrupulous businesses to gain a competitive advantage. In reforms as complex and alien to business as these, the risks are even higher. The current penalty regime is harsh. A flat rate fine of £400 can be levied by the regulator for any form of non-compliance, including innocent procedural mistakes.

Source: BCC re Pensions Reforms
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-----------------------------------------------------------------------------------------------------------------------------------------Pensions move will hurt manual workers, says UCATT
Manual workers will suffer serious disadvantage as a result of an upward shift in the retirement age, the Union of Construction, Allied Trades and Technicians (UCATT) has warned. The construction union was commenting after new figures from the Office for National Statistics (see www.statistics.gov.uk/regionaltrends42/) revealed that manual workers were more than twice as likely as professional workers to die before reaching 65 years of age. UCATT said the research means the government's plans to increase the retirement age to 66 years by 2016 with a subsequent shift to 70, 'is directly discriminatory against manual workers.'

The ONS report found that manual workers died before the age of 65 at a rate of 407 per 100,000. For professional and managerial workers the rate is 178 per 100,000.

Source: www.ucatt.info/content/view/906/30/
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-----------------------------------------------------------------------------------------------------------------------------------------The Occupational Pension Schemes (Investment) (Amendment) Regulations 2010
The Occupational Pension Schemes (Investment) (Amendment) Regulations 2010 (the Amendment Regulations) were laid before Parliament on 2 September 2010.  They introduce technical changes to the Occupational Pension Schemes (Investment) Regulations 2005 (the Investment Regulations) that are necessary to ensure compliance with Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 (the IORP Directive). Article 18(1)(f) of that Directive imposes a 5 per cent limit on the amount of resources an occupational pension scheme can invest in the sponsoring employer. The Investment Regulations already impose this restriction in most circumstances, but they provide an exception for investments by the operator of a collective investment scheme, and a transitional provision which allows certain schemes to retain employer-related investments in excess of the 5 per cent limit required by the IORP Directive. 

The changes being made to the Investment Regulations are:

  • the exception for operators of collective investment schemes set out inregulation 13(7) is revoked; and
  • the transitional provision allowing certain schemes to retain employer-related investments in excess of the 5 per cent limit set out in regulation 14(1)(b is revoked.

The Occupational Pension Schemes (Investment) (Amendment) Regulations can be obtained from the OPSI website at: www.opsi.gov.uk/. 

Source: www.dwp.gov.uk/newsroom/press-releases/2010/sep-2010/dwp115-10-020910.shtml
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-----------------------------------------------------------------------------------------------------------------------------------------BIS Triennial Survey of Foreign Exchange and Over-the-Counter Interest Rate Derivatives Markets in April 2010 - UK Data
On 1 September 2010, the Bank of England published details of the UK Data in the BIS Triennial Survey of Foreign Exchange and Over-the-Counter Interest Rate Derivatives Markets in April 2010

In April this year, central banks and monetary authorities in 53 countries, including the UK, conducted the latest triennial survey of turnover in the markets for foreign exchange (spot, forwards, foreign exchange swaps, currency swaps and options) and over-the-counter (OTC) interest rate derivatives. The surveys are co-ordinated on a global basis by the Bank for International Settlements (BIS), with the aim of obtaining comprehensive and internationally consistent information on the size and structure of the corresponding global markets. The Bank of England conducted the UK survey, which covers the business of leading institutions located within the United Kingdom in these markets.

Details figures are available at: www.bankofengland.co.uk/publications/news/2010/066.htm
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