UK roundup: Railpen, Royal Statistical Society, CPI, European Court of Justice
UK - Railpen Investments has appointed a head of investment management to oversee its £18bn in pension assets, managed on behalf of the railway industry.
Paul Bishop joins from Royal Liver Group, where he most recently was chief investment officer.
In his five years at the company, he held a number of roles, starting with investment manager. He previously worked at Mercer.
In addition to Bishop's appointment, Katrina Mackay and David Owen have joined as client investment services manager. Mackay joins from LPC, where she focused on investment strategies for defined benefit schemes, while David Owen joins from Aon Hewitt.
In other news, the Royal Statistical Society (RSS) has criticised the government's switch to the consumer price index (CPI) as the measure of indexation for pension schemes.
In an open letter to the chair of the UK Statistics Authority, Jill Leyland, vice-president of the RSS, said CPI was not a sufficiently accurate measure for inflation when applied to pensions.
Leyland criticised a review published by the Consumer Prices Advisory Committee last year, saying it did not consider the need for an index that took into account the household budget.
The letter continues: "There are good arguments for the CPI as a macroeconomic indicator (particularly once some indicator of owner occupier costs has been included), but, as you know, we do not feel it currently serves the purpose of being a sufficiently good measure of price inflation as experienced by households to be used in uprating pensions and benefits."
Leyland also asked the UK Statistics Authority to elaborate on any further changes to the retail price index, following changes to the formula to better account for seasonal variations in clothing.
The Bank of England last month said in its monthly inflation report that the change in RPI meant the inflation rate would have been 0.3% higher per annum between 1997 and 2009, leading to accusations that pensioners had lost out on significant indexation increases.
Finally, a ruling by the European Court of Justice (ECJ) on sex discrimination in the calculation of annuity rates has been strongly criticised by the National Association of Pension Funds (NAPF).
Darren Philp, director of policy at the organisation, said he was disappointed by the ruling that would lead to a worsening of people's pension incomes.
"While it is right that annuity providers should not arbitrarily differentiate between men and women, the data shows there is a clear difference between them when it comes to longevity," he said.
"It is, therefore, perfectly reasonable for annuity providers to offer rates on the basis of this difference, as long as it is based on clear evidence."
A report compiled for the Association of British Insurers further found that there was "significant" differences in accident, sickness and mortality risks.
Compiled by research group Oxera, the research warned that pension income would fall by more than 2% as a result of the ruling, with pensions law firm Sackers warning that examining individual annuity contracts would result in administrative headaches for all involved.
Zoe Lynch, partner at the law firm, said the ECJ had allowed the industry some breathing space by only enforcing the ruling as of next December.
"The ruling does seem to anticipate that all insurance contracts will need to be examined - not just those entered into after that date," she added.
"(This will be) a massive administration exercise leading to tension headaches all round. This will apply to annuities purchased to provide an pension income, as well as simpler short-term insurance products such as car insurance."
She said that, because the ruling expressly refers to insurance contracts, it is presently unclear how occupational schemes will be affected.