UK industry digests minimum income test in ECJ pensions guarantee ruling

first_imgEarlier this month Edmund Truell, founder of commercial consolidator Pension Superfund and former chair of the London Pension Fund Authority, said the Superfund estimated a potential cost to the UK of over £160bn (€187bn) as well as the potential forced closure of all UK defined benefit funds.Today Superfund CEO Luke Webster argued that although the ECJ had not ruled that 100% of benefits must always be paid, “the administrative cost is likely to be very significant, and an increased PPF levy will place further burden on the resources available to the pensions system as a whole”.‘Pragmatic’At the PLSA, director of policy and research Nigel Peaple described today’s ruling as “a pragmatic solution,” an assessment that was echoed by David Everett, partner and head of pensions research at consultancy LCP, who welcomed the judges taking “a sensible approach”.Their take was that, from a PPF financial perspective, the ruling represented a relief.“[I]t seems likely that many people in the PPF would be above the minimum income allowed,” said Peaple, although he warned the PPF would need to carry out detailed analysis before there could be certainty about the impact of the judgement on the liabilities of the PPF and on UK pensions.He noted there could be a shortfall in PPF’s funding, which could result in higher levies for pension schemes.“Compared to expectations, the administrative challenge is greater and the funding challenge probably much less.”Nigel Peaple, director of policy and research, PLSAEarlier this week the PPF confirmed its levy estimate for 2020/21 would be £620m, and IPE understands it will not be changing this as a result of this week’s ruling. A PPF spokesperson said: “The recent ECJ judgment in the case of PSV v Gunther Bauer has restated that, as a minimum, every individual must receive at least 50% of their accrued benefits. We consider that the implementation methodology we announced following the ECJ’s judgment in Hampshire, which will make sure that all our members receive at least 50% of the value of their accrued benefits, meets this requirement.“There are other details of the judgment that we’ll need to work through with the Department for Work and Pensions.” Anna Rogers, senior partner at ARC Pensions Law, said the financial impact on the PPF would be mitigated but that the minimum income test “looks like a nightmare to implement for the PPF”.Peaple put it this way: “Compared to expectations prior to the ruling, the administrative challenge is greater and the funding challenge probably much less.”This article was updated on 20 December with additional comments from the PPF. In a keenly anticipated pension guarantee ruling the European Court of Justice (ECJ) today rejected a previous argument that all defined benefit pension rights must be protected on employer insolvency, which had led to speculation UK DB employers could be faced with a huge new bill.In a judgement in the case of the Pension-Sicherungs-Verein v Günther Bauer, the ECJ instead ruled that the current EU legal requirement that individuals should be entitled to at least 50% of their benefits still stood as long as this level of compensation would not put them at risk of living below the poverty line.As explained by the Pensions and Lifetime Savings Association (PLSA), in the UK many people had thought the ruling might spell a requirement for the country’s pension lifeboat fund to increase compensation to 100% of benefits in all cases, potentially with ensuing “enormous new costs” for employers and possibly the government.The Pension Protection Fund (PPF) provides 100% of defined benefits to members already drawing their pension when the sponsor goes insolvent, and 90% to those who are not yet retired.last_img read more

West Brom chairman Jeremy Peace laments over Saido Berahino situation

first_img It read: “Sad how i cant say exactly how the club has treated me but i can officially say i will never play Jeremy Peace. The Baggies rejected a total of four bids from Tottenham while they also turned down Berahino’s transfer request last month, a nd while the club are yet to address his apparent outburst directly, Peace admitted they must move on. “We have a key player who has been very unsettled by antics which were designed to get him out of our club cheaply,” he said in a club statement. “Those tactics have continued despite my making our position clear in my first conversation with Daniel Levy on this subject in mid-August. “I said selling Saido so late in the window was not on our agenda. “Tottenham’s offers failed substantially to reflect Saido’s true value while the timing made no allowance for our own recruitment of a suitable replacement for a proven Premier League goalscorer. “Saido has been unsettled to the point where our head coach has not felt able to select him for our last three games. “We are now left with the task of repairing the damage created by this unfortunate episode.” West Brom chairman Jeremy Peace insisted the Baggies must start repairing the damage left by the Saido Berahino saga. Press Association It is understood Tottenham’s bids on Tuesday were marginally better than the north London club’s second offer, made last month, which would have only risen to £21million with clauses and add-ons. The Baggies remained determined to keep the 22-year-old at the Hawthorns after Peace held talks with the player last week and reiterated he would not be sold. Albion are understood to be unhappy with Spurs’ approach to the deal, which has only strengthened their resolve to keep Berahino. The frontman has been left out of West Brom’s last three squads during the speculation, with boss Tony Pulis insisting he was not in the right state of mind to play. Spurs had been searching for more firepower to help Harry Kane and, despite signing Son Heung-min from Bayer Leverkusen, maintained their interest in Berahino. He scored 20 goals last season and earned a call-up to the England senior squad, but missed this summer’s European Under-21 Championship with a knee injury. The Albion owner rejected two deadline day bids from Tottenham for the striker who has appeared to have indicated he will never play for the club again. In a message on his official Twitter account, the striker seemed to hint he was prepared to go on strike at the Hawthorns. last_img read more