UK - BAA made a £218m (€248.5m) one-off deficit payment into its defined benefit (DB) scheme in 2009, following an increase in the actuarial deficit.
In news elsewhere, Aegon Trustee Solutions has warned the impact of poor admin could costs pension schemes “millions”. And research from the Personal Accounts Delivery Authority (PADA) suggests 90% of employers will seek external advice on the impact of the 2012 pension reforms.
And Westminster City Council has appointed advisers to its pension fund while Cornwall County Council has awarded a passive global equity mandate.
BAA Group, which was forced to sell off some of its airports last year over claims of anti-competitiveness, reported a £217.8m non-cash charge in its 2009 results relating to its DB pension scheme.
Interim figures from the company showed the pension scheme had moved from a surplus to a deficit of £249.8m by 30 June 2009, which the firm attributed to increased liabilities as a result of lower discount rates and a higher forecast inflation curve. (See earlier IPE story: Cardano to advise BAA’s DB trustees)
The firm noted the pension scheme deficit “does not reflect the benefit of the commutation payment into the scheme that may arise due to the Gatwick sale, that would reduce commensurately the scheme’s deficit, assuming no other changes”. Until then, it confirmed, BAA’s agreed annual cash payments to the scheme will remain at £70m until the end of 2011.
Ahead of the closure of the Pension Regulator’s (TPR) consultation on record keeping next week, Aegon Trustee Solutions has revealed data quality issues could cost the pensions industry “millions of pounds in the long run” if it is not addressed.
Steve Connor, head of pensions services at Aegon Trustee Solutions, claimed the average variation in data quality could be as much as 5% and poor data quality can cause inaccuracies in scheme liabilities and increased costs to the pensions industry. “That is £50k for each £1m of scheme assets - which for a £25m scheme would potentially cost £1.25m,” according to Aegon.
“It’s clear that high-quality data is at the core of good scheme governance. The impact of poor data quality could result in increased compensation risks as well as increased liabilities for the scheme sponsor,” added Connor.
Aegon Trustee Solutions noted that TPR’s stated objective in its consultation on new rules is that data should be sufficient to pay the right benefits to the right beneficiaries at the right time and “it is hard to disagree with this,” said Connor.
Pension reforms scheduled for implementation in 2012 will cause 90% of UK firms to seek external advice on how they will be affected, according to research commissioned by PADA.
Findings from the forthcoming research revealed small firms - those with two to 49 employees - are most likely to seek guidance from accountants, with 67% planning to seek advice on how to comply with auto-enrolment.
In contrast, 56% of medium-sized employers - with 50-499 employers - intend to consult a financial adviser, along with 54% of large firms. However, a further 43% of firms with more than 500 employees expect to turn to specific employee benefits consultants, with this figure rising to 77% in firms with more than 10,000 staff.
Roy Porter, head of intermediary distribution at PADA, said: “For many small firms, the introduction of automatic enrolment will be the first time they will need to provide an employee pension and make contributions. Ensuring they have access to the correct information will be crucial in helping them comply with the reforms.”
Westminster City Councilhas awarded contracts for investment consultancy and specialist investment services to its £487.2m pension scheme.
The council re-tendered contracts relating to actuarial, investment consultancy and specialist investment services such as custody duties in March 2009. (See earlier IPE article: Westminster re-tenders advice contracts)
It has now appointed Amaces to take on the specialist investment advisory role, including global custodian, which was previously held by BNY Mellon. Meanwhile. Deloitte Total Reward and Benefits has taken on the investment consultancy role from Mercer.
And Cornwall County Councilhas appointed Legal & General to run an initial £50m passive global equity mandate for its pension scheme, which was valued at £788.8m in March 2009.
The council tendered for the completely new portfolio in December 2008, although it noted at the time that other asset classes in addition to equities could be added to the mandate to be managed on a passive basis. (See earlier IPE article: Cornwall targets passive global equities)
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