The government’s plan for pensions reform was due to be published before the start of June. As we went to press the most likely date still looked like May 22 but the contents of the white paper were being kept under wraps by the government.

The link between earnings and the state pension will be restored in 2012, after Tony Blair and Gordon Brown finally reached agreement on the issue.

The Conservative Party has declared that it is broadly behind the proposals contained within the Pension Commission’s report.

As the government absorbs the Turner Report and begins to formulate its pension reform proposals, shadow pensions minister Nigel Waterson raises some questions of his own

The Pensions Regulator’s criticism of pension scheme trustees has provoked a strong defence of the role of trustees from a number of organisations who have accused the regulator of picking on a defenceless target.

The independent trustees of the Berkeley Berry Birch (BBB)

Contributions to AVC schemes have hit record levels over the past twelve months with an increased awareness of pensions causing more people to address their level of pension savings.

The rising costs of final salary pension schemes are starting to have an effect on the UK economy as a whole, says Aon Consulting.

Eight UK firms have signed up to the United Nations Principles for Responsible Investment (PRI), which launched at the end of April.

A trio of prominent pension providers have warned that clients often use self-invested personal pensions (Sipps) inappropriately and many of them would be better off with a cheaper type of pension. Dentons Pension Management, Norwich Union and Scottish Widows all revealed their worries exclusively to PM.

A French holiday home loophole for self-invested personal pension (Sipp) investors that was apparently exposed by a firm of solicitors has been branded “irresponsible” and “frustrating” by pension and property experts alike.

Friends Provident is urgently reviewing its self-invested personal pension (Sipp) proposition, after its assets under management (AUM) dropped by £82m last year.

Defined benefit (DB) scheme members are set to receive more than twice the retirement income level of their defined contribution (DC) counterparts, sparking fears of a two-tier pension nation and a whole generation of pensioners in poverty.

New self-invested personal pension (Sipp) business has continued at record high levels in the six weeks following A-day, according to Hornbuckle Mitchell.

Have you been keeping up to date with the Trustee Masterclass series produced as a joint initiative between PM’s sister title, Pensions Week, and Merrill Lynch Investment Managers (MLIM)?

Captain Hook could have told him, but tree-cutter Freddy Buckland found out for himself sure enough. Found out what? Well, that crocodiles get wound up by repetitive noise, that’s what.

The Pensions Regulator has listened and acted upon the consultation responses, but a few complications still lurk in its statement on defined benefit scheme funding, say industry specialists.

The majority of pension schemes do not support auto-enrolment, and if auto-enrolment was made compulsory, two-thirds would extensively revise or completely abandon their schemes.

More self-invested personal pension (Sipp) providers have ruled out holding investments in private equity rather than in prisons or hedge funds.

The government has now issued The Impact of Age Regulations on Pension Schemes, a 35 page document that provides a fuller understanding of the affect of new regulations.

Little-known MP James Purnell has become the new pensions minister for reform, the 13th since 1997.

Hundreds of defined benefit (DB) scheme members claiming enhanced protection are being turned away because they are “ticking the wrong box”.

A loophole in the simplification rules has exposed the possibility of passing pension funds to your children and avoiding inheritance tax (IHT) altogether, according to Standard Life.

Real estate investment trusts (Reits) look set for some phenomenal demand when they are introduced in January next year, as 90% of independent financial advisers (IFAs) expect to be advising their clients on the investment.

While you were sitting on your decking sucking on an icy cold G&T over the last bank holiday weekend, you may have fleetingly thought: “It’s nearly summer, so I’ll have to get my PM Awards entry off soon.”

The awards ceremony that has had the whole industry waiting with bated breath finally took place on the evening of Thursday May 11.

The category for best small to medium-sized scheme covers a wide range of schemes of varying sizes and from all sorts of backgrounds.

One of the most significant trends in pension fund investment over the last few years has been the shift to appoint specialist investment managers instead of managers that cover a number of asset classes. There are a number of reasons for this: pension funds are using a wider range of asset classes and specialist managers often produce superior performance, for example.

Ruth Emery talks to CBI deputy director general John Cridland about the pensions ombudsman, the Turner Report, the inadvisability of 100% pension coverage, defined benefit schemes, the state pension and more

People do not save enough and the elderly have to find work to pay for their retirement. The richest country on Earth also finds itself in a pension crisis, as Ruth Emery discovers in the latest of PM’s foreign investigations

1. There is no doubt that in the run up to A-day, media interest in Sipps has brought this type of product to the attention of a much wider market than ever before. Certainly the speculation about the option of including residential property generated interest, as did the subsequent U-turn, and these topics were widely covered in consumer press.
   The public has become mistrustful and sceptical about pensions in recent years, so any optimistic coverage should be viewed as a good thing and is bound to stimulate demand.
2. Providers who already offer other regulated products will be familiar with the concepts behind the regulation and should be able to react easier than specialist unregulated providers. Some of the regulatory focus in recent years has been on internal systems and procedures and this could mean smaller companies or non-specialists fail to meet the standards. We must hope that consumer regulation can be added without overregulation.
   I suspect that regulation is unlikely to deter the larger firms already active in the Sipp market, though it could perhaps be a barrier for some of the smaller players or to some new entrants dipping a toe into the market.
3. As I mentioned above some new entrants may be put off and I think the market would probably be most attractive to those new entrants who can leverage their existing business strategy. Clearly the investment flexibility of Sipps is one of the product's main attractions, so you could expect those investment houses who are not already involved in the Sipp market to consider doing so.
   However, companies who are thinking of entering the Sipp market should not underestimate what is involved to meet investment and pension administration requirements.
   Regulation will technically mean anyone can become a provider with right permissions so there may be interest from areas we have not yet thought about.
4. Clearly, current providers would be happy to meet the demand. However, if the rate of growth in the Sipp market continues unchecked, new entrants will obviously be attracted. In addition to large L&P administrators, as I mentioned above, I think the Sipp market is likely to attract investment players (banks, investment managers etc) and perhaps overseas providers, and even those with a technology bias. There is a growing demand from advisers and their clients for technology solutions to help offer an integrated offering, and it may be that some overseas companies who have the experience in this market will be able to adapt it to the Sipp market.

1. A-day has certainly stimulated interest in pensions in general and Sipps in particular. However, it is not just Sipps that have benefited – insured products have as well. The market stimulation has come from two sources:
   - While recent client interest in pensions has been low, confidence is returning due to a number of factors, such as the recent stock market revival, people beginning to recognise the need to save for retirement, and the advantages of using pensions for this.
   - Advisors are reviewing client circumstances, and for larger funds they are now using Sipps as a ‘wrapper’ concept.
2. Some consolidation is possible, but it is still too early to anticipate. The key driver for any consolidation will be capital adequacy requirements.
3. If capital adequacy requirements are met, we may see groups offer their own Sipp to market, either by bringing Sipps in-house or by contracting-out elements.
   In terms of innovation, general feedback from advisers is that providers and administrators need to focus upon getting the basics right first, before shifting the focus on to developing propositions further.
4. Organisations that already have the scope, or are used to dealing with large volume business, will need to reassess their capabilities and consider the implications of altering their platforms to administer Sipp business. They will have to scale up and invest in systems and processes. Sipps, by their very nature, are more complex and many providers will take the third-party route due to the costs involved.

1. Growth in the Sipp market has been consistent at around 20% a year – although in the run up to A-day, from our experience, the rate accelerated dramatically. We don’t expect to see an explosion of interest immediately post A-day, as advisers and clients will need to adjust to the new world, but the opportunities are clear and we fully expect to see future growth rates of more than 20% a year. We anticipate a big surge of business towards the end of the tax year as advisers adjust to the new pensions tax framework. We also expect Sipps to benefit from the demise of legacy products such as executive personal pensions, Section 32, additional voluntary contributions and small self-administered schemes, and also from the accelerating decline in employer-sponsored defined benefit schemes.
2. If the current Financial Services Authority (FSA) proposals on regulation of the operation of Sipps and personal pension schemes are enacted, we expect to see significant consolidation, as the regulatory overhead will be disproportionately large for smaller businesses. Bizarrely, it may also push some barriers back into an occupational framework – which will be unregulated – which seems very unsatisfactory and highlights one of the shortcomings in the FSA proposals.
3. We expect to see growing interest in the Sipp market from the investment houses, fund managers, private banks and other wealth managers. With up to £250bn of existing assets potentially up for grabs, this will be too big an opportunity to be ignored. The main losers will be insurance companies with legacy individual products, many of which will be at risk.
4. This is a big issue, with potentially a huge mismatch between supply and demand of scaleable administration and technology platforms. This suggests there will be opportunities for new entrants for the technology sector – alongside other major administration companies, including wrap providers and fund supermarket operations.

1. A-day and the period around it has been a very exciting period for us and yes, our own Sipp volumes have seen a marked increase and we expect this trend to continue. It’s not hard to see why business is booming, the new relaxed contribution limits combined with the ability to concurrently contribute to more than one pension scheme, and all this at the same time as increased demand for consolidation. Sipps could be the perfect vehicle for consolidating pension arrangements and getting maximum flexibility around drawing benefits and investment choice.
2. Consolidation of Sipp providers and their offerings are likely to increase; with the limited capacity of smaller providers, independent financial advisers (IFAs) should look to established names with proven systems, processes and financial strength to cope with the anticipated growth. However, I believe much of the new regulations should already be best practice in the Sipp industry, and as such most quality providers will not need to overhaul their existing business models and systems.
3. I expect new entrants to this growing market, and that it will develop from niche to mainstream over the coming years. The differentiators in the new Sipp market will focus on service quality, transparency, product features and web functionality. Innovation around these differentiators and how they can be delivered will therefore be essential for providers in creating successful and attractive Sipp propositions. First-class customer service must be the focus of any new Sipp provider.
4. The large administrators will certainly want to play in this market, because established providers and life insurers will find Sipp administration complex and costly and with pressure to increase profit margins, it may make outsourcing a very attractive route. The question is how many of them will bring truly flexible and transparent offerings to the table? Many will use this opportunity to re-package old products and call them Sipps, but in reality will they still have limited investment choice, hidden charges and poor access? Advisers and direct customers alike will need to make sure they do not buy products that say Sipp, but which are actually just a marketing spin of an old offering.

Sipps are on the march. According to PM’s annual survey of this sector of the pensions market, they are destined to be the top choice for pensions and are growing at up to 50% a year, says Ruth Emery

John Moret recently watched a group of teenage girls come up with a revolutionary way of looking at pensions. He wonders here whether they actually went far enough

They may not be selling like the proverbial hot cakes just yet – but Sipps undoubtedly represent an outstanding new business opportunity for intermediaries says Jan Regnart

The Co-operative Group is an employer that finds itself in a unique situation since, by its very nature, it has to put the welfare of its employees first. Nick Eyre explains the philosophy

A relaunched website gives advice on pension administration topics such as simplification, reporting, and risk management. Sarah Lama describes the development process of www.raisingadminstandards.com

The pensions ombudsman has the job of interpreting definitions contained in the law. Jason Shaw looks at some decisions that will affect the way pensions are administered in the future

John Lawson answers this month’s questions (see page 14) concerning a successful self-employed man who is approaching retirement with little pension provision

Designing an annuity for the discerning 21st century customer is being made more difficult by the current attitudes of regulators and their bizarre ASP arrrangements, argues Ken Wrench

Environmental issues are at the top of the political agenda and green investors can benefit. Emma Howard Boyd identifies six key areas to consider – with clean energy and water management leading the way

The pooling of assets has a fifty-year history in The Netherlands. Egon Tibboel argues that the Dutch model of flexibility, pragmatism and collaboration and service provision also has a role to play in the future

Liverpool Victoria has found a new group chief executive in Barclays’ Mike Rogers. He replaces Malcolm Berryman, who left the firm abruptly last November after six years in the job.

Two high-profile Watson Wyatt employees have made surprise retirement announcements and will leave the firm towards the end of this year.

David Logan, a partner at Deloitte, has been appointed chief financial officer at F&C Asset Management where he is expected to start shortly as an executive director as well.

Standard Life Investments has poached Darrin Night-ingale from AXA as head of marketing. Nightingale was previously group head of brand at AXA.

Annuities can be compared to the old adage “can’t live with them, can’t live without them”. There are some for whom the idea of annuitisation really sticks in their craw, while the vast majority simply couldn’t live without them, as they wouldn’t be able to replace their income any other way.

1. The annuity market has not significantly grown over the last couple of years but it is forecast to grow substantially over the next six as a result of closed defined benefit schemes and demand from defined contribution schemes. As yet the impact of simplification is not known.
   We do not necessarily expect a huge increase in demand on the back of simplification. However, A-day has brought opportunities such as value-protected and flexible annuities improving annuities as an attractive retirement alternative.
2. Annuitisation, to a certain extent offers something for everyone, as the range of annuities on offer is relatively large and does cover different risk profiles and income objectives. We believe annuities will continue to be the preferred method for crystallising benefits and new developments will be attractive to those with larger sums to invest.
3. Consumer and adviser confidence has improved. However, whether this has impacted on annuitisation in terms of retirees choosing alternatives to annuities is unclear and probably too soon to tell. The with-profits market increased in 2005 and this may be on the back of improved stock market performance and consumer confidence.
   We anticipate a slight increase in demand for investment-linked annuities.
4. There will always be a need for retirement products, however, how providers react will depend to a certain extent on the government's plans and initiatives.
   In terms of product developments, we anticipate providers will respond to the A-day changes with value-protected annuities and flexible annuities, for example.
   We may well see new product incorporating a number of features from the current at-retirement product range to meet changing consumer needs as how and when people retire changes.

1. The annuity market has seen improving rates as bond yields have rallied and new entrants have adopted aggressive pricing to establish market share. It is too soon to assess the impact of A-day, though there has been a general increase in activity as those delaying making their retirement decisions take action.
   Although the advent of alternatively secured pensions (ASP) brings compulsory annuitisation to an end, the inheritance tax implications will need careful consideration if they are not to inhibit ASP take-up in the high net worth market.
2. An income that will last as long as you do is becoming ever more vital as average life expectancy increases. Retirees continue to underestimate how long they are going to live and so the peace of mind provided by securing a lifetime income needs to be explained.
   Annuities continue to offer an efficient way to insure against this growing risk of living too long and will remain the right choice for the vast majority. Annuities now span the investment risk spectrum offering fixed interest and with-profits to the mass market and unit-linked fund choices to the more sophisticated investors.
3. Now that retirements are averaging 20 years plus, focus on low bond yields and annuity rates has diverted attention from the real enemy– inflation. Most people buy level annuities, which could be worth 40% less in 20 years time (assuming 2.5% pa inflation). And yet for many, their ‘lower to medium’ risk profiles make with-profits annuities a real option.
   By anticipating about 3% bonuses, they can match the starting income of a conventional level annuity and enjoy the potential for some inflation protection. With long-term mixed fund returns in the 8% range in prospect, no wonder with-profits annuities are so popular.
4. My old mate Steve Bee recently pointed out that there are more pension savings accumulated in the UK than in the rest of Europe put together. This ‘success’ has been achieved through many years of co-operation between the public and private sectors. Recent trends to over regulate and over tax the private sector need to be reversed for the market to develop healthily.
   As far as annuity developments are concerned, the government should change the 35% tax charge on death lump-sums under ‘value protection’ to a rate less penal to the vast majority of annuitants (who are standard rate taxpayers).

1. The full effects of simplification are still to emerge although we are seeing increased interest in annuity purchase generally. The market is likely to continue to evolve for some time as new ideas emerge about using the new rules to provide flexible solutions for clients. We have seen considerable interest, and no small amount of confusion, in value protection.
2. Flexibility of income and death benefit planning is great for those that can afford it. Report after report, however, has demonstrated that most people at retirement will struggle to provide a secure income that is high enough to meet their needs.
   Add to this the fact of improving life expectancy and it becomes clear that the security and stability of an annuity will remain the best solution for most people.
   Concern over passing funds to family members on death may have received a lot of coverage but, for the majority, ensuring they do not outlive their income will be a much more important concern. This situation may change over a considerable period of time but we are convinced that the market will continue to grow for several years yet.
3. Our consumer research has indicated that individuals value the peace of mind offered by a secure income for life and will continue to select a conventional annuity with a guaranteed income. There is undoubtedly a place for some form of investment-linking for some people and we expect to see interest grow, especially as memories of market falls recede.
   Falling annuity rates will, to some extent, be reflected in lower expectations of future returns from other investments which may affect the popularity of alternative forms of pension provision. Quality advice is crucial to ensure the right choice is made.
4. We believe there are signs of growing awareness of the issues surrounding private provision for retirement, both in terms of the need to save more and maximise use of all assets to generate income. As far as annuities and the at-retirement segment are concerned, the impact of any such trends will probably manifest itself over a period of years.
   We would expect to see moves to integrate pension and non-pension facilities to maximise flexibility for a much larger proportion of the population than will benefit from the flexibility offered by A-day changes alone.

The constantly growing annuities market faces many issues due to the diversity of its client base, and now it must cope with the demands of a defined contribution structure. Pádraig Floyd looks at the market today

The majority of people in retirement today live below the poverty line, says Michelle Cutler. So, what can be done to improve retirees’ standard of living?

Care needs to be taken to choose the right annuity for your clients needs, but Trevor Mitchell believes that, like football, this is the beautiful game

A-day brought about a major overhaul to the pensions industry, but many of the changes focused on pre-retirement pensions. What does the future look like for annuities?

Improvements to the distribution of annuities in the mass market are essential if defined contribution plans are to deliver adequate retirement incomes, says Debbie Harrison