1. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Setting the scene for DB
Janet Brown, Partner

2. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
What developments are we going to cover?
DB look back in anger? events in brief
The Green Paper
The Pensions & Lifetime Savings Association – the interim report and the case for consolidation
Election promises
What does the future hold ?

3. DB look back in anger? 2016

4. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Some defining DB moments in 2016
Work & Pensions Select Committees
BHS
PLSA DB Taskforce
British Steel
Halcrow

5. DWP/BIS report July 2016

6. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Growing deficits
BhS Sale
Sir Phillip Green and Frank Field M.P
DWP / BIS
Further investigations into DB pensions
Role of tPR

7. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Economy
Low interest rates for prolonged period
Market volatility
Employer
Need to allocate capital for growth
Appropriately reward current employees
Over-regulation & complexity
Entrenched benefits
Difficulty making changes
Why are DB schemes under pressure?

8. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change

9. SAUL – Trustee training 19 January 2017
Lack of inter-generational fairness and risk bearing is sub-optimal
Rigid benefit design
Key theme:
2016 DB pensions “under pressure“
Fragmented system – scheme consolidation considered
Inflexible regulation

10. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Current options when under pressure?
Pension increase exchanges
Factors
Trivial pensions
Buy-in / buy-out
RPI/CPI
Transfer options
Future service benefits

11. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Work & Pensions Committee Report – 21 December 2016
Trustees armed with more powers
Mandatory clearance
Actuarial valuations
Tougher /
nimbler TPR
Help schemes
restructure
PPF levy better reflecting risk
Treble fines payable

12. Green Paper
Feb 2017

13. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Government Green Paper – 20 February 2017 “Security and sustainability”
Indexation
Funding & investment
Employer contributions & affordability
Stressed schemes
Member protection
TPR’s powers
Consolidation

14. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Green Paper – commentators’ common ground?
Extend tPR’s powers
Statutory RPI/CPI override?
Key areas
Stressed schemes need flexibility
Valuations – how often? how?

15. PLSA – The case for consolidation- March 2017

16. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change

17. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
PLSA’s DB taskforce 2nd report
The case for consolidation (“Superfunds”)
Four models

18. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
4 models of consolidation in the PLSA report
Model 1
Scheme services consolidated
Model 2
Investment – asset pooling
Model 3
Single governance across schemes
Model 4
Superfunds

19. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
Where next from the Green Paper?
Consultation closed on
Building consensus
White Paper in the Autumn? & a new Pensions Bill?

20. Election
promises

21. PMI Trustee Seminar: 2017 a year of controversy, evaluation and change
It was the night before the General Election…… (as at May 22nd) the main parties’ key points are:
Con
Lab
Lib Dems
Extend tPR’s powers
Amend the Takeover Code to protect pensions of “systemically important” businesses
Review of tax relief on pensions – single rate of relief at rate higher than 20%
State pension - double lock
State pension - triple lock
State pension - triple lock to the end of the next Parliament
Increase State Pension Age (SPA) in line with life expectancy
Consolidation of schemes
Same sex couples full equality
Extend auto-enrolment to self-employed
New SPA pension review
Promote LISAs as saving vehicle

22. Questions

23. Janet Brown, Partner