UK: Thinking beyond Brexit

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Pensions regulation has taken a backseat to Brexit but this has not stopped the industry from moving ahead with changes

Key points

  • The focus on Brexit has meant that legislators have neglected many other areas of political importance, including pensions
  • The government is being urged to build on the success of auto-enrolment
  • Industry leaders are active as ever, including calling for a ‘superfund’ solution for underfunded defined benefit schemes
  • Local authority schemes have come under pressure from politicians and protestors to adopt the goal of a shift to a zero-carbon economy

“This government is committed to legislating when parliamentary time allows.” This has become a familiar refrain in answers to parliamentary questions and in consultation documents over the past year.

With Brexit Day – 31 October 2019 at the time of writing – looming large in the minds of most within the UK’s financial services sector, it is little surprise that most aspects of regular political and legislative activity have fallen by the wayside. 

For the UK’s pensions and retirement sector, that means the long-awaited Pensions Bill 2019 remains unpublished. This means no confirmed framework for the emerging commercial defined benefit (DB) consolidator vehicles, no rules requiring compliance with the planned pension dashboard, and no formal new powers for the Pensions Regulator (TPR) to tighten funding requirements and improve governance standards.

The promise of collective defined contribution schemes – a new concept for the UK – emerged last year after fruitful negotiations between Royal Mail and the Communication Workers’ Union, and a framework is expected in the Pensions Bill. As of June, however, a written question to the Department of Work and Pensions (DWP) received the “when parliamentary time allows” response. Royal London’s pension specialist Helen Morrissey has called on the government to devote time to the Pensions Bill.

Guy Opperman, the UK’s pensions and financial inclusion minister, retained his role during the latest reshuffle of ministerial positions – much to the relief of the pensions sector, which has been used to a ‘revolving door’ of ministers in recent years. He has been vocal in his support for auto-enrolment, regularly trumpeting the fact that 10m people have been brought into a workplace pension scheme since the regime was introduced in 2012.


Gregg McClymont, director of policy at £7bn (€7.7bn) master trust The People’s Pension and a former pensions spokesman for the opposition Labour Party, is urging the government to build on auto-enrolment and expand its coverage.

The People’s Pension calculates that reducing the auto-enrolment age limit to 18 and calculating contributions from the first pound earned would boost savings by £4bn.

McClymont also highlights the importance of progressing development on the dashboard concept, which has received widespread industry support. In its response to a consultation on the topic, the government said it was “committed” to forcing schemes to report data to dashboard providers – “subject to securing parliamentary time”.

A lack of legislation has not meant a lack of activity elsewhere – in fact, industry leaders are as busy as ever.

The Pensions Bill’s contents have already been well signposted, with some elements having been subject to consultation earlier this year or in 2018. For Nigel Peaple, director of policy and research at the Pensions and Lifetime Savings Association (PLSA), a delay getting the bill to parliament has meant more time for the trade body and its members to prepare.

“There is lots of policy development from within government and the regulator that has not fully emerged into the light, which is keeping us busy,” Peaple says. “We’ve also got our own proactive agenda… so, hopefully, we’ll have the ability to put in a good response and influence discussions appropriately.”

Although there is no official framework for commercial consolidators such as the Pension SuperFund and Clara-Pension, it has not stopped them from pushing forward with their plans to bring in DB schemes in an effort to improve funding levels and offer better benefits than the Pension Protection Fund. 

The Pension SuperFund has announced two deals with unnamed schemes that are at an advanced stage. The first is currently with TPR awaiting approval, and it announced in July that it had signed an exclusivity agreement for a second deal worth £300m. 

The PLSA – which has been calling for a “superfund” solution for underfunded DB schemes since 2017 – has been participating in roundtable discussions with DWP and the UK Treasury regarding the rulebook, Peaple says, as have the consolidator funds.

Arguably the biggest topic for the PLSA and pension fund trustees is governance. 

“We’re dealing with stuff that’s further down the pipeline, which will affect schemes directly in a year, or two or three years,” Peaple says of the PLSA’s to-do list. “[Trustees] are all at the coalface, and they’re dealing with effective governance and good administration.”

Climate challenge for local authority schemes

The Local Government Pension Scheme (LGPS) includes 100 member funds and £330bn (€357bn) in assets across the UK. Multiple consolidation moves could see this shrink, with schemes in Scotland and England’s West Midlands considering merger options. The pooling of assets among English and Welsh LGPS funds is advancing at a pace as the pooling entities have become established and local councillors have become more comfortable with the new way of investing.

However, the nature of LGPS funds – in particular their scale and taxpayer-funded status – has meant many have been targeted by climate change activists in recent months. In July, representatives of Fossil Free Greater Manchester and Extinction Rebellion, a UK environmental movement, protested outside the offices of the £23.8bn Greater Manchester Pension Fund (GMPF), calling for it to divest from all fossil fuel companies.

Earlier in the year, activists from Extinction Rebellion gained entry to an LGPS conference and disrupted a speech by local government minister Rishi Sunak. They also called for immediate divestment from fossil fuels, calling them “worthless zero assets”.

LGPS funds and pooling companies have been actively investing in renewable energy assets and assessing their exposure to carbon-intensive companies and industries. The £8.9bn Merseyside Pension Fund has invested in a number of ESG-themed funds and set targets to reduce climate change risk in its portfolio. Pools including the London CIV and LGPS Central have set up sustainable investment strategies for their clients, and there is growing demand for more.

GMPF has also engaged with campaign groups, posting on Twitter shortly before July’s protest: “While we might disagree on [the] best way to get there, we share [the] same goal of a zero-carbon economy as quickly as possible. We’re also committed to a ‘just transition’ ensuring interests of workers and communities are properly taken into account.”

In addition, while the government has resisted calls for intervention into LGPS investment strategies, pensions minister Guy Opperman stated in May that “trustees who do not consider those matters will be breaching their statutory and potentially their fiduciary duties not only to current but future members”.

TPR has issued multiple guidance papers in recent months setting out expectations and actions for trustees in anticipation of new powers later down the line, and is increasing its proactive work – in part as a response to criticism from politicians about a failure to anticipate recent high-profile pension fund problems such as BHS, British Steel and Carillion.

New TPR chief executive Charles Counsell, in his inaugural public speech earlier this year, highlighted an increase in proactive supervisory work and one-to-one supervision, while the regulator has already begun site visits of local authority schemes.

“I think that could have quite a big impact,” Peaple says. “It’s not that extensive, but it is a change of approach where they want to be more on the front foot in terms of their relationships [with schemes]. I wouldn’t say it’s a radical change; it’s more an evolution of what TPR has been doing over the last few years.”

In a recent survey, consultancy XPS Pensions highlighted that many pension funds were struggling to meet the regulator’s guidelines. Only a third of schemes surveyed by XPS said trustee board decisions were made quickly and one in five said they regularly ran out of time at meetings to discuss all issues.

Wes Jones, head of pensions for XPS’s Manchester office, says that while the legislation required to enshrine new powers into law has yet to arrive, the regulator has been making sure standards are  embedded in the industry and trustees and other stakeholders are living up to them.

“The regulator’s latest funding statement sets out a clear direction of travel,” he says. “There was a lot of detail about classifying schemes by covenant strength, funding strength, maturity, recovery plans… It has been quite direct about what trustees should be focusing on.”

Whatever the UK’s future holds beyond 31 October, the pace of change in the pensions sector shows no signs of slowing down.

UK pension assets

UK pension assets
 Pension fund/entityAssets (€’000s)
1Universities Superannuation Scheme Ltd.78,213,000
2BT Group plc62,028,179
3Royal Bank of Scotland Group (RBS)52,959,600
4Lloyds Banking Group49,538,600
5Rothesay Life42,107,884
6Pension Protection Fund (PPF)35,617,200
7Pension Insurance Corporation34,976,460
8Railways Pension Trustee Company Ltd.34,141,500
9Barclays Bank plc32,343,200
10HSBC Bank (UK) Ltd.30,294,510
11BP plc28,008,280
12Greater Manchester Pension Fund (LGPS)27,614,600
13British Airways plc27,600,000
14Strathclyde Pension Fund (LGPS)25,420,800
15BAE Systems plc23,665,919
16Coal Pension Trustees Ltd.23,607,700
17National Grid plc21,533,700
18British Broadcasting Corporation (BBC)19,972,832
19Aviva plc19,002,020
20West Midlands Pension Fund (LGPS)18,836,989
21Shell UK17,611,539
22Tesco plc17,343,713
23West Yorkshire Pension Fund (LGPS)16,695,024
24Ford Motor Company Ltd.14,700,708
25Rolls-Royce Group plc14,227,845
26GlaxoSmithKline plc14,013,976
27Santander UK plc13,988,306
28Royal Mail Group13,600,100
29Transport for London12,703,400
30ICI Pension Fund (Akzo Nobel)12,477,000
31British Steel Pension Scheme12,294,800
32Marks & Spencer Group plc11,884,782
33J. Sainsbury plc11,564,707
34TPT Retirement Solutions (The Pensions Trust)11,478,801
35Co-operative Group Ltd.11,466,750
36IBM UK Holdings10,430,154
37Unilever plc10,329,000
38Merseyside Pension Fund (LGPS)10,324,939
39Tyne & Wear Pension Fund (LGPS)10,214,892
40South Yorkshire Pension Fund (LGPS)9,780,562
41Lancashire County Pension Fund (LGPS)9,775,564
42Centrica plc9,453,669
43Prudential plc9,449,214
45Lothian Pension Fund (LGPS)9,286,130
46EDF Energy9,088,310
47Jaguar Land Rover Ltd.8,947,167
48RSA Insurance Group plc8,734,090
49Hampshire Pension Fund (LGPS)8,347,931
50Essex Pension Fund (LGPS)8,168,238
51BMW (UK) Ltd.8,167,000
52The People’s Pension7,818,440
53Diageo plc7,672,651
54Walgreens Boots Alliance7,479,927
55Western Power Distribution7,403,314
56Zurich UK General Services Ltd.7,341,425
57Kent Pension Fund (LGPS)7,061,100
58London Pensions Fund Authority (LGPS)6,750,200
59Nationwide Building Society6,620,862
60John Lewis Partnership plc6,502,447
61Cheshire Pension Fund (LGPS)6,370,803
62Legal & General Mastertrust6,349,230
63Nottinghamshire Pension Fund (LGPS)6,284,881
64Fujitsu Services Ltd.6,037,803
65Standard Life DC Master Trust6,031,368
66Invensys plc (Schneider Electric)6,009,000
67Esso Petroleum Company Ltd.6,000,473
68Staffordshire Pension Fund (LGPS)5,964,650
69AXA UK plc5,957,137
71FirstGroup plc5,919,500
72East Riding Pension Fund (LGPS)5,873,638
73Premier Foods plc5,859,108
74Siemens plc5,786,000
75Vodafone Group plc5,754,000
76Derbyshire Pension Fund (LGPS)5,728,792
77Hertfordshire Pension Fund (LGPS)5,620,015
78Avon Pension Fund (LGPS)5,601,454
79Effem Holdings Ltd (Mars UK)5,566,413
80NATS Ltd.5,541,784
81Nestlé UK Ltd.5,503,149
82Wm Morrison Supermarkets plc5,502,801
83North East Scotland Pension Fund (LGPS)5,294,496
84AstraZeneca plc5,228,038
85DB Group Services (UK) Ltd.5,201,460
86Bank of England5,096,133
87West Sussex Pension Fund (LGPS)5,084,303
88SSE plc5,032,554
89Surrey Pension Fund (LGPS)5,016,255
90Imperial Brands Plc.5,004,923
91Leicestershire County Council PF (LGPS)5,003,960
92Devon County Council Pension Fund (LGPS)5,000,821
93DHL Group Retirement Plan4,914,000
94Scottish Power Ltd.4,894,410
96Mondelez UK4,853,721
97Innogy Renewables (RWE)4,829,424
98Heathrow Airport Holdings Ltd (BAA Pension Scheme)4,772,599
99Babcock International Group plc4,771,139
100Pernod Ricard UK (Allied Domecq)4,771,000
101Teesside Pension Fund (LGPS)4,747,054
102Standard Life Aberdeen4,735,189
103Smiths Group plc4,695,286
104Environment Agency PF (EAPF) (LGPS)4,639,617
105Telent Technology Services Ltd.4,615,124
106Saint-Gobain Ltd4,605,000
107Marsh & McLennan Companies UK4,571,100
108Aon plc4,561,112
109United Utilities plc4,543,781
110Tayside Pension Fund (LGPS)4,525,208
111Phoenix Group Holdings4,478,992
112British American Tobacco plc4,473,422
113Clydesdale Bank plc4,441,588
114Norfolk Pension Fund (LGPS)4,427,652
115ITV plc4,291,207
116East Sussex Pension Fund (LGPS)4,222,695
118Associated British Foods plc4,173,756
119North Yorkshire Pension Fund (LGPS)4,157,762
120Lafarge UK4,115,563
121Rhondda Cynon Taf Pension Fund (LGPS)4,020,179
122Bank of America Merrill Lynch (UK)3,922,191
123UK Power Networks Holdings Pension Scheme3,906,285
124Balfour Beatty plc3,884,169
125Willis Towers Watson3,842,682
126RELX plc3,801,741
127BOC UK3,787,687
128Magnox Group3,778,956
129Merchant Navy Officers Pension Funds3,763,153
130Cambridgeshire Pension Fund (LGPS)3,710,944
131Kingfisher plc3,626,403
132Hewlett-Packard Ltd. UK3,625,140
133Chevron Energy3,615,717
134Pearson plc3,609,036
135Total UK Pension Fund3,570,350
136John Wood Group3,536,105
137Dorset County Pension Fund (LGPS)3,521,895
138Buckinghamshire County Council PF (LGPS)3,495,244
139Anglo American3,475,174
140Rio Tinto plc3,457,628
141Heineken UK (Scottish & Newcastle Pension Plan)3,444,758
142Durham County Council PF (LGPS)3,411,329
143Greater Gwent (Torfaen) PF (LGPS)3,404,525
144Suffolk County Council PF (LGPS)3,402,310
145Pfizer Ltd.3,359,457
146Thales UK Ltd.3,340,500
147Xerox Ltd.3,256,066
148Worcestershire Pension Fund (LGPS)3,249,145
149Combined Nuclear Pension Plan3,239,104
150Hanson UK3,227,300
151Bombardier Transportation UK Ltd.3,186,231
152Daily Mail & General Trust plc3,185,196
153Co-operative Bank3,172,723
154Cumbria Pension Fund (LGPS)3,141,580
156Go-Ahead Group3,080,018
157Wiltshire Pension Fund (LGPS)3,045,290
158Fife Council Pension Fund (LGPS)3,036,319
159Church of England3,010,340
160Dyfed County Council Pension Fund (LGPS)2,993,077
161Whitbread Group Pension Fund2,943,603
162PricewaterhouseCoopers (PWC) LLP2,928,079
163Northamptonshire Pension Fund (LGPS)2,917,288
164Oxfordshire Pension Fund (LGPS)2,906,382
165Falkirk Council Pension Fund (LGPS)2,894,484
166States of Jersey Treasury2,873,051
167ASDA Group Ltd.2,869,581
168Mitchells & Butlers plc2,865,245
169Carnaudmetalbox Group UK Ltd.2,849,276
170Sanofi UK2,830,940
171Royal London Group2,821,334
172Severn Trent2,811,633
173Rexam plc2,789,043
174Leonardo Helicopters Pension Scheme2,786,756
175LifeSight UK Master Trust (Willis Towers Watson)2,784,750
176Wandsworth Pension Fund (LGPS)2,774,185
177Gloucestershire Council Pension Fund (LGPS)2,758,760
178Lincolnshire Pension Fund (LGPS)2,744,557
179Compass Group plc2,721,287
181Thames Water Utilities2,689,004
183Bedfordshire Pension Fund (LGPS)2,672,312
184UBS UK2,648,650
185Reach (Trinity Mirror)2,616,497
186JP Morgan Europe (UK)2,600,302
188Peugeot Citroen Automobiles2,567,000
189Civil Aviation Authority (CAA)2,539,338
190Cardiff Council Pension Fund (LGPS)2,531,420
191Somerset Pension Fund (LGPS)2,523,019
192Warwickshire Pension Fund (LGPS)2,517,323
193Berkshire Pension Fund (LGPS)2,506,563
195Mercer Master Trust2,457,224
196Johnson Matthey2,432,819
197UK Asset Resolution2,430,960
198United Biscuits2,424,385
199Gwynedd Pension Fund (LGPS)2,419,274
201H J Heinz2,375,994
202Swansea Pension Fund (LGPS)2,368,320
203Taylor Wimpey plc2,343,868
204Highlands Pension Scheme (LGPS)2,323,558
206Plumbing & Mechanical Services Industry Pension Scheme2,283,300
208Molson Coors Brewing Company2,281,125
209Shipbuilding Industries Pension Scheme2,272,087
210Cornwall Pension Fund (LGPS)2,243,320
211Shropshire Pension Fund (LGPS)2,226,269
213Anglian Water2,195,698
214Clwyd Pension Fund (LGPS)2,169,147
216Pilkington Group2,072,513
217CSC Computer Sciences2,068,311
218Japan Tobacco1,993,368
219Goldman Sachs International1,962,582
220Trafalgar House Pension Trust1,939,411
221Camden Pension Fund (LGPS)1,925,497
222Southwark Pension Fund (LGPS)1,908,579
223Bank of Ireland UK1,893,000
224Tower Hamlets Pension Fund (LGPS)1,857,230
225Kier Group1,840,163
226Reckitt Benckiser1,813,429
227MRC Pension Scheme1,798,561
228TRW LucasVarity1,788,000
229Kelda Group1,783,409
230Hackney Pension Fund (LGPS)1,760,859
231Michelin Tyre1,742,300
234Northern Powergrid Pension Fund1,729,107
235Shop Direct Holdings1,720,924
236Nissan Motor Manufacturing UK1,707,465
237AWE Management1,685,108
238Lambeth Pension Fund (LGPS)1,673,152
239Newham Pension Fund (LGPS)1,669,163
240Bayer UK1,660,370
241Northumberland Pension Fund (LGPS)1,659,362
242RWE npower1,653,028
243City of Westminster Pension Fund (LGPS)1,648,612
244Aegon Master Trust1,646,805
245Maersk UK1,646,532
247Electricity North West1,633,000
248WS Atkins1,612,593
249Lewisham Pension Fund (LGPS)1,610,168
250Haringey Pension Fund (LGPS)1,607,273
251Liverpool Victoria Friendly Society1,604,016
252Islington Pension Fund (LGPS)1,600,263
253Travis Perkins1,583,012
254SCA Hygiene UK1,577,808
255Thomas Cook1,577,785
256Telefonica UK (O2)1,563,916
258Greenwich Pension Fund (LGPS)1,548,809
259NatWest Markets1,546,093
260P&O UK Scheme1,528,277
261Citigroup Global Markets1,520,661
262States of Guernsey Superannuation Fund1,512,491
264Rentokil Initial1,489,618
265BNP Paribas1,489,000
266Schlumberger Business Consulting1,483,826
267W H Smith1,472,035
268London Borough of Ealing Pension Fund (LGPS)1,464,922
270London Borough of Croydon Pension Fund (LGPS)1,443,417
271NOW: Pensions1,422,131
272Goodyear Dunlop Tyres1,390,147
273Howden Joinery1,382,416
274Royal Borough of Kensington & Chelsea Pension Fund (LGPS)1,377,734
275London Borough of Enfield Pension Fund (LGPS)1,372,607
276Tate & Lyle1,369,260
277Standard Chartered1,366,151
279London Borough of Barnet Pension Fund (LGPS)1,338,155
281Dairy Crest1,292,190
282Dixons Carphone1,285,109
283Smith (DS)1,282,089
284Ulster Bank1,269,846
285Northern Foods1,265,737
286City of London Pension Fund (LGPS)1,235,705
287London Borough of Hillingdon (LGPS)1,232,055
288Northumbrian Water1,224,895
289London Borough of Hammersmith & Fulham Pension Fund (LGPS)1,222,888
291Legal & General1,216,379
292John Laing Group1,211,923
293London Borough of Barking & Dagenham Pension Fund (LGPS)1,210,832
294London Borough of Bromley Pension Scheme (LGPS)1,207,925
295London Borough of Hounslow (LGPS)1,207,692
296Northern Ireland Electricity Networks1,179,516
297Unite the Union1,176,542
298De La Rue1,168,291
299Rhodia Pension Fund1,124,000
301Croda International1,098,305
303Astrium (Airbus UK)1,079,480
304University of Cambridge1,074,375
308London Borough of Waltham Forest (LGPS)1,029,704
309Kingston Pension Fund (LGPS)1,014,822
310London Borough of Bexley Pension Fund (LGPS)1,014,232
311Commerzbank UK1,006,000
312London Borough of Brent Pension Fund (LGPS)1,004,976
313Greene King1,001,605
315Yorkshire Building Society993,376
316Veolia UK990,600
317London Borough of Harrow Pension Scheme (LGPS)989,554
319Dumfries & Galloway Pension Fund (LGPS)974,663
320ANZ UK Staff Pension Scheme965,032
321Ladbrokes Coral939,797
322London Borough of Redbridge Pension Fund (LGPS)933,919
323Financial Conduct Authority933,375
324Costain Pension Scheme916,873
326Water Companies Pension Scheme900,575
328Arup UK Pension Scheme889,373
331Society of Lloyd’s of London861,045
332London Borough of Havering Pension Fund (LGPS)852,464
333Scottish Borders Pension Scheme (LGPS)851,892
334London Borough of Merton Pension Fund (LGPS)837,681
335Weir Group834,422
337Parliamentary Contributory Pension Fund831,305
338Cancer Research UK824,572
339London Borough of Sutton Pension Fund (LGPS)782,731
341Lend Lease UK Pension Scheme777,093
342Powys Pension Fund (LGPS)760,849
343Sony UK Pension Scheme745,397
345Janus Henderson Group741,563
346Smurfit Kappa712,000
347Pirelli General Pension and Life Assurance Fund693,994
348Smith & Nephew693,987
349Oxford University Press693,929
350Isle of Wight Pension Fund (LGPS)692,560
353University of Manchester682,681
354London Stock Exchange667,226
355Connect Group662,544
358National Express Group617,435
362TT Electronics594,711
363Wellcome Trust Pension Scheme590,267
365RPC Group581,509
367Comet Pension Fund578,200
368Shetland Islands Council Pension Fund (LGPS)577,846
369University of Leeds554,312
370Uniper Group of the ESPS550,804
371BBA Aviation550,651
372BHP Billiton541,462
373University of Liverpool533,767
375Mears Group488,557
376Jardine Lloyd Thompson486,217
377University of Edinburgh479,381
379University of Glasgow477,550
380Barratt Development469,939
382Orkney Islands Council Pension Fund (LGPS)454,141
383PZ Cussons451,985
384Morgan Advanced448,627
386Mpac Group443,555
388William Hill422,946
389Coca-Cola HBC398,200
391STV Group382,513
393Hogg Robinson362,775
396Avon Rubber355,058
397Grosvenor Pension Plan350,925
398Man Group349,176
400John Menzies339,740
402Ultra Electronics331,608
406Fluor Limited Retirement Benefits Scheme310,519
407Aston Martin Lagonda299,416
408Network Rail Ltd.290,590
409Industry Wide Coal290,255
410TP ICAP270,678
412Galliford Try266,148
413Places for People Group Retirement Benefit Scheme265,815
415Grafton Group256,944
419Crest Nicholson223,386
427Rathbone Brothers150,711
428P&O Ferries144,374
431Bovis Homes129,881
436Brewin Dolphin119,936
437AG Barr117,660
441Direct Line106,489
445TI Fluid Systems92,800
446BCA Marketplace86,131
450Millennium & Copthorne64,606
452Hill & Smith61,487
455Law Debenture60,262
456James Fisher & Sons59,371
459Keller Group50,348
460Close Brothers Group46,536
461International Personal Finance46,115
467Premier Oil36,140
468St Modwen35,865
474UDG Healthcare27,905
475RHI Magnesita26,400
476Berkeley Group26,177
481Vauxhall Motors/GM UK12,604
482BlueSky Pension Scheme6,407

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