B&CE, the operator of auto-enrolment provider The People’s Pension, has put 140 staff on temporary leave as a result of the coronavirus pandemic.
It said that in light of the demands of COVID-19, it had modified its operating model to meet reduced service volumes and its duty of care to staff. The company operates all its services in house and usually has a large number of staff on site.
It also said the dramatic decline in stock markets had affected its revenues, “so we are taking prudent measures like this while still protecting jobs”.
The 140 staff – a bit less than a quarter of the total headcount – will be paid through the government’s Coronavirus Job Retention Scheme, and any staff member earning above the scheme cap of £2,500 a month will have their pay topped up by B&CE so they receive 80% of their full salary.
A B&CE spokesperson said: “We’re following the government’s advice on running essential financial services for customers during this global pandemic.
“We’re in unprecedented times and have had to adapt our ways of working and to a changed financial environment – as many businesses have had to do up and down the country.”
In addition, The People’s Pension has changed its charging structure, saying it will be fairer and cushion the effect on scheme revenues of the extreme market volatility sparked by the coronavirus crisis.
It has introduced an annual charge of £2.50 and will halve the starting rate for a rebate on the management charge. Currently the rebate kicks in for savings over £6,000, but from later this year the threshold will be lowered to £3,000.
“Our modified charging structure futureproofs revenues against the unpredictable financial impact of COVID-19.”
Patrick Heath-Lay, B&CE chief executive officer
It will continue to levy a management charge of 0.5%.
Patrick Heath-Lay, B&CE chief executive officer, said: “As we evolve our charging approach to meet changing requirements, we think this approach combines fairness, incentives to save, and prudence.
“Our modified charging structure cuts fees as members save more, reduces the cross subsidy from actively saving members to inactive small pots, and futureproofs revenues against the unpredictable financial impact of COVID-19.”
Six seize better bulk annuity pricing
At least six UK defined benefit pension schemes completed de-risking transactions last month as bulk annuity pricing improved amid severe market disruption, according to an announcement from Legal & General Group.
It said its pension risk transfer team was well-accustomed to agile working, but had developed practices to remotely price, negotiate, and sign deals. Including two with US pension schemes, the transactions it concluded last month covered £261m (€293m) of pensioners’ benefits in total.
The deals ranged in size from around £2.2m to £80m. Three separate transactions were signed on 27 March alone.
Chris DeMarco, managing director of UK pension risk transfer, Legal & General Retirement Institutional, said: “Recent history demonstrates that periods of market disruption may provide opportunities for schemes to de-risk their schemes.
“The sharp widening of credit spreads, combined with the strong appreciation in the value of Gilts many schemes are holding, has improved buy-in and buyout pricing.”
Iain Brown, pensions partner at EY, said: “Despite the economic uncertainty created by COVID-19 and recent market volatility, we have witnessed resilience in the bulk annuity market with pricing holding up and actually improving.
“Any practical challenges created by transacting in a ‘virtual’ environment seem to be easily overcome where there is an appetite to be agile for the benefit of the client. This was very much the case in a buy-in recently done with L&G which completed ahead of schedule and, at the same time, secured an excellent outcome for our client’s pension scheme.”
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