All articles by Matthew Craig
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Case Studies
Case study: Berkshire sets up longevity insurance
The Royal County of Berkshire was one of the first local authorities in the UK to hedge its longevity risk. Nick Greenwood, pension fund manager for the Royal County of Berkshire Pension Fund, wanted to reduce volatility around the scheme's assets and liabilities, making the employer contributions more stable and ...
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Case Studies
Case study: Diageo offers liquid assets
In its efforts to reduced its DB scheme’s deficit, Diageo, which owns a number of Scotch whisky distilleries, contributed £430 million in maturing whisky to a joint venture. This will cut the scheme deficit of almost £900 million and reduce the levy charged by the Pension Protection Fund (PPF). This ...
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Analysis
Employers adopt strategies to de-risk defined benefit pensions
If you read nothing else, read this... When reducing risks linked to final salary plans, employers are extending timeframes to up to 20 years. Organisations can pledge company assets, such as land and property, to under-funded pension schemes for aneventuality such as insolvency. Deficit recovery plans longer than 10 years ...
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Analysis
Pensions roundtable: Financial education is vital
Getting staff interested in financial matters is not easy, but it is a necessity when it comes to pensions, says Matthew CraigAs any compensation and benefits professional knows, the level of financial knowledge among today's employees varies hugely.Some staff may want online access to their pension pot to implement their ...
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Analysis
Pensions roundtable: How to offer a defined contribution pension
In the past, defined benefit (DB) plans operated on a trust basis - a proven format offered along with independent oversight supplied by a board of trustees assisted by professional advisers.But the mass migration to defined contribution (DC) pensions has changed this and put more responsibility on the employer. This ...
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Analysis
Pensions roundtable: Make sure staff see the value of pensions
Employers and staff both need to see the true value of perks, says Matthew CraigIf employers are to get the full value from investing in pensions and benefits, staff have to appreciate their reward package, particularly the value it offers compared with obtaining the perks privately.If not, benefits spend may ...
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Analysis
Pensions roundtable: Savings culture needed in workforce
Encouraging a savings culture among employees will boost interest in pensions, says Matthew CraigEasy access to credit, boosted by advertising and today's culture of instant gratification, has led many people to run up significant debts.According to the study Financial wellbeing in the workplace, published by the Institute for Employment Studies ...
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Analysis
Pensions roundtable: Sound business reasons to offer a good pension scheme
A good pension can attract talented staff and enhance an employer's reputation, says Matthew CraigIt is a truism to say people are the most important element in most modern businesses. Phrases such as "our people are our greatest asset" are heard countless times in the corporate world.It therefore follows that ...
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Analysis
Pre-retirement priorities for contract-based pension scheme members
As DC scheme members approach retirement age, key actions are needed to ensure they will receive the future income they require, says Matthew CraigHow a contract-based defined contribution (DC) pension scheme helps its members as they approach retirement is a critical test of its quality. This is because members need ...
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Analysis
Interview with: Victoria Nye, chair of the Investment Governance Group sub-group for DC pensions
The Investment Governance Group’s Victoria Nye explains the thinking behind the body’s six principles for DC pension scheme governance to Matthew CraigSetting standards is something of a balancing act. Set them too high and they may appear unattainable and demotivating; set them too low and there seems little point in ...
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Analysis
Salary cap can control final salary pension costs
If you read nothing else, read this...- Capping final salary benefits is one of a number of de-risking measures employers can take to control their pension liabilities.- Increases in pensionable pay may be restricted to anything from zero up to a maximum of 2% to 2.5%, regardless of an employee's ...
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Analysis
Pension decumulation's role in employee retirement planning
Employers are paying more attention to pension decumulation to help staff understand the options in the run up to retirement, says Matthew CraigEnsuring pension scheme members save enough for their retirement may be the main concern for employers and pension trustees, but there is also growing interest in pension decumulation ...
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Analysis
Why group self invested personal pensions (Sipps) are becoming popular in the workplace
Group self-invested personal pensions are gaining popularity in the workplace because they have something extra to offer, says Matthew CraigSelf-invested personal pensions (Sipps) have sometimes been seen as expensive, bespoke plans for affluent individuals, but they are now entering the workplace in the form of group Sipps.Last year, BT and ...
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Analysis
The cost to pension plans of longer life expectancy
Employers must contemplate strategies to tackle the risk of longer life expectancies, says Matthew CraigIf you read nothing else, read this...A one-year difference between actual and expected life expectancy can increase scheme costs by just over 3%.Average life expectancy can vary by five or six years between schemes.Longevity swaps are ...
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Analysis
How annual management charges can reduce pensions savings
Annual management charges can have a significant impact on the growth of investments if a pension scheme is set up on a commission basis, so employers may need some hard negotiations, says Matthew CraigIf you read nothing else, read this...Employees face higher annual management charges (AMCs) for group pension schemes ...
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Analysis
New trends for DC pension default funds
Most defined contribution pension members use schemes' default funds, but investment trends are changing, says Matthew CraigIf you read nothing else, read this...Some 82% of defined contribution members do not actively decide where to invest.Their contributions go into a default fund, which generally aims for positive returns without excessive risk-taking. ...
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Analysis
Special report: Defined contribution pensions
Executive Summary: Employees need to be educated about the importance of investments in contract-based DC plans. The introduction of auto-enrolment in 2012 will increase take up of pension schemes to around 80% or 90%. This means that pension costs could jump dramatically for most employers. Planning for personal accounts should ...
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Analysis
Update on pensions accounting standards
Pension fund accounting - what's going on?UK: Accounting Standards BoardFinancial Reporting of Pensions discussion paper issued 31 January 2008, written with European standard-setters to influence the debate on accounting for pensions.The paper proposed: Using a risk-free rate to value liabilities The use of actual, not expected, returns in pension fund ...
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Analysis
Planning for personal accounts in the run up to 2012
The introduction of personal accounts (PA) in 2012 may seem like yet another periodic reorganisation of the British pension system, but finance directors should not underestimate its potential impact.PA were first recommended by the Pensions Commission, led by Lord Turner, as a way to boost pension provision among the low-paid ...
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Analysis
Transferring staff out of defined benefit pensions to reduce liabilities
Employers’ concerns over defined benefit liabilities should ensure that enhanced value transfers are here to stay, Matthew Craig reports.As Jane Austen moght have said, had she been a pensions consultant, it is truth universally acknowledged that a finance director in possession of defined benefit (DB)†scheme must be in want of ...