Cold calling
18 December 2018 was certainly a bad day for any fraudsters as the long-awaited regulations for a ban on cold-calling were finally approved by the House of Commons. Initially the ban was intended to have been introduced in June 2018 but the Treasury decided to consult further on several technicalities before it was able to sign off on the decision. The ban is now law under the Electronic Communications (Amendment) (No. 2) Regulations 2018 expected to come into effect in early January 2019.
However, a ban is only the first step in a long journey. Whilst it goes a long way to protect those with savings from potential fraud and will come down heavily on those caught, there will need to be much publicity needed to educate the public so that all are aware that cold calling is illegal and the traps to look out for.
Both the Pensions Regulator (TPR) and the Financial Conduct Authority launched a new look ScamSmart media campaign back in August warning savers of the dangers of being scammed (see page 1 for more details). Coincidently, TPR has itself been impersonated by possible scammers in their attempt to extract hard-earned savings from genuine, law-abiding, citizens.
The campaign has worked well though as TPR announced that six people have recently been questioned by the police after over 370 people transferred £18m into eight pension schemes in a suspected fraud operation.
The Pensions Regulator
Talking of the Pensions Regulator, they have just appointed Charles Counsell as their new chief executive, taking over from Lesley Titcomb in April 2019. Counsell is currently chief executive of the Money Advice Service and has previously worked for TPR as director of automatic enrolment so has the service credentials to enable him to direct the TPR as it implements a quicker and tougher approach to pension regulation, thus ensuring the 30 million members or so of workplace schemes are properly protected.
Self-employed pensions boost
Under plans unveiled in mid-December 2018, the Department for Work and Pensions (DWP) will develop new ways to include 4.8 million self-employed workers in saving for their ultimate retirement.
The DWP has disclosed that the trial will encourage individuals who become self-employed to continue making contributions to a pension or long-term savings product and will ensure that the better use of financial technology will help them overcome any barriers to saving. This has come not a moment too soon as the Parliamentary Under Secretary of State for Pensions and Financial Inclusion, Guy Opperman, pointed out recently that only around 14% of those who are self-employed were saving into a pension in the 2016/17 financial year. Although other organisations have indicated the figure may be as high as 30%, again, the numbers are still relatively small, given the fact that the self-employed will depend heavily on any pension savings to supplement their State pension.
Pensions dashboard
Whilst the DWP has finally signed off on the pensions dashboard it will now be up to the pensions industry to make sure it happens.
Even though the DWP’s feasibility study was more than nine months overdue, it is clear that they had listened and have done much to allay concerns. The DWP intends to begin with a non-commercial, single dashboard, funded by the pensions industry and overseen by a newly created organisation – the Single Financial Guidance Body.
The DWP has confirmed though that ultimately it intends to move to a multi-dashboard approach – something that will eventually enable consumers to benefit from the individual innovation of the businesses and organisations they are involved in building their own dashboards.
Likewise, while the project will initially be voluntary, the DWP will legislate for compulsion “when parliamentary time allows” allowing consumers to have a complete view of their pension income. Any legacy and more complex pension schemes will have longer to prepare. The State pension will be included too even if this will only be through a link to begin with.
It is viewed by many that the dashboard will become a key part to improve engagement and help reunite people with lost pension pots or consolidate them. Whilst we are still a long way from perfection, it does just seem that we are moving in the right direction. Only time will tell.
The “B” word
Leaving the European Union with a “No deal” could cause nearly a 40% increase in the buyout deficit for defined benefit (DB) schemes, warn some industry experts.
Assuming sterling falls yet further against the dollar, gilt yields drop by ½% and an increase in inflation, DB schemes could see a surge in their liabilities, wiping out much of the gains they had made over 2018, despite a predicted 6% increase for the international constituents of the FTSE 100 on the back of any currency downturn.
In contrast, a “soft Brexit” could reduce DB schemes’ buyout deficit by some 24%, as removing uncertainties would improve the UK’s growth, increase the pace of increases in bank rates, strengthen sterling and increase gilt yields.
It certainly looks to be a great start to 2019 for many DB schemes. ●
David Deidun, Partner