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UK roundup: Aon Corporation, Goddard Perry Consulting, Pensions Policy Institute

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  • UK roundup: Aon Corporation, Goddard Perry Consulting, Pensions Policy Institute

UK - The accounting deficit of the 200 largest privately sponsored pension schemes remained relatively stable in November, increasing by £2bn to £71bn, according to the latest Aon Hewitt 200 Index.
 
If this pattern continues into December, this year will have been the most stable for pension scheme funding levels since 2006, according to Aon Corporation.
 
The typical accounting deficit for defined benefit schemes has increased by around 50% over the last four years, from an average deficit of  £55bn in 2006 to an average deficit of  £87bn in 2010.
 
Volatile market conditions since the start of the economic downturn have often resulted in large swings in pension scheme deficits from month to month, making the end-of-year pensions balance sheet difficult for employers to predict.
 
With UK government proposals to link private pension payments to the consumer price index (CPI) rather than the retail price index (RPI) expected to be confirmed today, many companies will be integrating this change into their accounts for the first time this month.
 
Aon Hewitt said this could result in a reduction of £35bn to the deficit of the Aon Hewitt 200 pension schemes, although the exact impact will only be known when companies file their accounts.
 
Elsewhere, Goddard Perry Consulting, a leading employee benefits consultancy, has been appointed by Telehouse, the datacentre provider, to service its group personal pension, which covers 90 members and had £3.5m in assets as at end of September.
 
Steve Goddard, managing director of GPC, said: "The group personal pension market is a key market for us and one in which there is a great deal of growth and opportunity."
 
Goddard Perry Consulting, formerly known as Michael Kirk & Partners, has been a third-party administrator for more than 20 years and operates on a fixed fee basis.

The firm is also the appointed administrators for the Spinnaker Master Trust.
 
Lastly, a report published today by the Pensions Policy Institute (PPI) has found that the fall in commitment to company-sponsored pension schemes over the last 30 years has been due to a number of factors, and not just changes in taxation policy.
 
The Actuarial Profession sponsored the report, with non-financial support from Age UK.
 
Chris Curry, PPI research director, said: "Employer-sponsored pension provision has been falling since the 1960s, and over that period of time, there have been a number of changes to the tax treatment of pension savings.
 
"But these have been happening against the backdrop of broader economic changes, increases in life expectancy and regulatory changes for pension schemes."
 
Mr Curry said changes to pension provision could not be laid at the door of tax changes alone, although some of the tax changes might have accelerated change, or at least failed to stem the tide of employers reducing their commitment to pension provision.
 
The PPI said the changes to tax-relievable pension contributions to be introduced by the coalition government in April 2011 will only affect very high earners initially, nearly all of whom will be in the top 1% of UK earners.
 
However, the report said freezing the annual allowance would increase the number of people who were affected over time, so that an individual contributing less than £40,000 in 2011, but increasing contributions in-line with average earnings growth each year, could breach the annual allowance by 2016.
 

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