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UK roundup: De La Rue makes CPI switch, FCA eyes BSPS advice

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The pension scheme for De La Rue, a leading producer of banknotes and security products, will switch its indexation in April in an effort to tackle its funding deficit.

In a statement to the stock market this morning, the company said the trustee board of its £974.5m (€1.1bn) defined benefit (DB) scheme had decided to shift its inflation measure from the retail prices index to the consumer prices index (CPI). The latter is usually the lower measure.

The move is expected to cut the scheme’s deficit by roughly £70m, the company said. At the end of March this year, the scheme had a £230m shortfall, according to De La Rue’s annual report.

“Following a request from the company and a detailed legal review, the trustee concluded that CPI is currently a more suitable index for the calculation of annual increases in the scheme,” De La Rue said. “CPI is used by the UK government for public sector pensions and is increasingly being used by businesses across the UK.”

Under a funding plan struck last year, De La Rue has agreed to pay more than £238m into the scheme by 2028.

The BT Pension Scheme and Dairy Crest’s pension fund have both made similar moves in recent months. The UK government has voiced tentative support for allowing more schemes to make such a decision, and is expected to flesh out the idea in a white paper on DB reform in the next few months.

Politicians call for abolition of ‘clawback’ option

Seven members of the Labour party have backed an early-day motion calling for the government to abolish so-called “clawback” options for some DB schemes.

Members of the Midland Bank Pension Scheme – now owned by HSBC – have been campaigning for several years for the bank to scrap its clawback policy, which allows members’ benefits to be reduced by the amount they are expected to get from the state pension. Campaigners have claimed it has disproportionately affected lower earners.

The early-day motion – an action used by politicians to publicise issues in the UK’s lower house of parliament – stated that the MPs were concerned that “many staff were denied the opportunity to make additional financial plans for their retirement”. The motion also said that other banks have either chosen not to apply the clawback or have withdrawn it as an option for their schemes.

Regulator aims to improve advice for British Steel members

The Financial Conduct Authority (FCA) is visiting Port Talbot in Wales in an effort to help members of the British Steel Pension Scheme avoid frauds and scams.

With a number of the £15bn scheme’s 125,000 members considering transferring their benefits out of the fund – rather than to the Pension Protection Fund or the new British Steel scheme – reports have emerged of poor advice practices and confusion over what options are available.

Giving evidence to the Work and Pensions Select Committee last week, FCA director of strategy and competition Christopher Woolard said the regulator was “visiting advisers in the Swansea area and the Port Talbot area, reminding them of their requirements”.

Nicola Parish, executive director of frontline regulation at the Pensions Regulator, told MPs: “We are in close contact with the [British Steel] trustees and ensuring that they are making sure that all of the information is getting out to members, to help those members spot and avoid a scam.”

TPT appoints Redington

TPT Retirement Solutions, a multi-employer DB scheme and defined contribution master trust provider, has appointed Redington as its independent investment consultant. TPT manages more than £9bn of assets and caters for 290,000 members.

Cliff Speed, the provider’s CIO, said: “We believe that the strong intellectual foundations on which Redington’s strategic advisory services are built will support TPT’s ability to continue delivering a high-quality investment service for all of our schemes and the underlying members.”

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