The UK government and the UK Statistics Authority (UKSA) will issue their response to the joint consultation on reform to the Retail Prices Index (RPI) methodology on 25 November, according to a letter from the Chancellor published yesterday.
The response publication will occur alongside the one-year spending review, which the government announced last month.
The RPI consultation is about aligning the inflation measure with that of the consumer price index (CPI) including housing costs (CPIH), which typically is 1% per annum lower than RPI.
Insight Investment has calculated that, all else being equal, a simple alignment with CPIH would reduce the pension fund benefits of millions of savers, and result in a transfer of wealth from index-linked Gilt holders to the UK government of around £100bn (€110bn)-£130bn.
As a solution, the pensions industry has called for index-linked Gilts to be adjusted from RPI to CPIH plus a margin, or the government could consider paying any future lost income upfront.
The consultation was originally due to close in late April, but the deadline was extended to late August because of the coronavirus pandemic.
£415m Reckitt Benckiser buy-in completed in early first lockdown
The defined benefit pension fund for consumer goods company Reckitt Benckiser completed a £415m buy-in with Scottish Widows on 25 March, shortly after the beginning of the first UK-wide lockdown due to the coronavirus pandemic, it was announced today.
The transaction removes the interest rate, inflation and longevity risk relating to around half of the pension fund’s pensioner liabilities.
The trustees were advised by Willis Towers Watson and Travers Smith, with Scottish Widows advised by Herbert Smith Freehills. LCP provided advice to the sponsor.
Brian Bentley, chair of the trustees, said the partnership with Scottish Widows was an important step in the fund’s de-risking journey.
“The trustees have been working with our advisers over a number of years to secure the right long-term de-risking deal for the fund,” he said. “We were impressed with the agility shown by Scottish Widows, alongside our advisers, to complete the transaction at a particularly challenging time.”
Separately, K3 Advisory today announced the completion of buy-ins totalling £22m across two unnamed pension schemes. The transactions were led by Cartwright Benefit Solutions and insured with Just Group.
Although confinement measures introduced in response to COVID-19 have made bulk annuity transactions logistically more challenging, the disruption to financial markets has meant prepared schemes could take advantange of attractive pricing.
Aon said that although there have been fewer mega deals in the UK risk settlement market this year compared with last, the market has still thrived, with mid-sized and smaller schemes increasingly active. The consultancy expects the risk settlement market to exceed £50bn by the end of the year.
Regulator urges industry to pledge scam fight
The Pensions Regulator (TPR) has called on the pensions industry to publicly pledge to combat pension scams.
The call is part of a campaign launched by TPR supported by the Pension Scams Industry Group.
Pension providers, trustees and administrators are being urged to help protect savers thinking of cashing in their pensions by ensuring they can spot the warning signs of a scam and are informed of any risks when they look to make a transfer.
Industry members will also be challenged to educate themselves about current and emerging scam tactics and adopt best practice when it comes to transfer due diligence.
Nicola Parish, executive director of frontline regulation at TPR, said: “Pension scams devastate lives. As the first line of defence for savers, trustees and pension providers have a vital role to play in beating the people behind these despicable crimes.
“Scammers are targeting pension pots big and small and so I call on the industry to do its bit and make the pensions pledge to help prevent people losing a lifetime of savings.”
Office for Investment created for foreign investment drive
The UK government has established an Office for Investment to support efforts to attract foreign investment to the country.
It said the new unit would connect public and private sector expertise “while ensuring high and rigorous standards of scrutiny and security”, and came in response to “extensive engagement with investors”.
“The new Office will support the landing of high value investment opportunities into the UK which align with key government priorities, such as reaching net zero, investment in infrastructure and advancing research and development,” it said.
The Office will be based in the Department for International Trade, with minister for investment Gerry Grimstone leading its work in close partnership with No. 10, under sponsorship of the prime minister and Chancellor of the Exchequer. It will be staffed by “highly experienced individuals with both private sector and cross-government experience”.