Regulation of occupational schemes, pensions for the self-employed and the age to receive pensions credit are all up for discussion, according to minister for pensions reform James Purnell.

Pensions Management is launching a hard-hitting campaign to raise awareness about the need for people to start saving for retirement before it’s too late.

If you’re facing your quarterly trustee meet­ing and are dreading a long exposition on a complex area of fund management strategy, fear not. FT Business has launched Pensions Gym, a free, interactive online service that offers ‘workouts’ based on pensions and investment concepts.

Secretary of state for work and pensions John Hutton explains why he believes the proposals outlined in the recent pensions white paper mean a fair and simple system for all

BAE Systems has negotiated a groundbreaking plan to fund its UK defined benefit (DB) pension schemes’ £3.1bn deficit by raising the company’s retirement age in line with life expectancy.

The UK public is increasingly concerned about pensions issues, according to figures from the Pensions Advisory Service (TPAS).

The TUC has reacted angrily to suggestions by the NAPF that employers should be given more “flexibility”, possibly to cut back on accrued benefits.

Fund managers must be forced to disclose their voting records as trustees witness a “roll-back” in public reporting, says Trades Union Congress (TUC) general secretary Brendan Barber.

Sustainable and responsible investment seems to be a priority on the UK business agenda – the UK Social Investment Forum (UKSIF) has launched a two-year programme promoting it to pension funds, and business leaders have offered their support to Tony Blair to tackle climate change.

Norwich Union (NU) is “in discussion with the government at the very highest level” about undertaking the administration for the National Pension Savings Scheme (NPSS), PM can reveal.

Before April 6, 2006, a transfer payment normally had to represent the whole of a member’s benefit under an occupational pension scheme. A partial transfer was only allowed where the transfer included contracted-out rights and the receiving scheme was contracted in (or not willing to accept the contracted out rights). In this case, the contracted out rights could remain in the transferring scheme. In certain circumstances, it was also possible to pay partial transfers where the scheme was winding up.

The government’s tinkering to the finance bill’s taxation on trusts proposals has been broadly welcomed, but a full U-turn is needed, say politicians and industry experts.

There’s a new product in the pensions market, and it’s shaking up the industry for all the wrong reasons.

I read in my daily paper today that Hergé, the cartoonist creator of Tintin, is to be posthumously honoured by the Dalai Lama for making what he describes as “significant contributions to the public understanding of Tibetan culture”. This is in belated recognition of that excellent tome Tintin in Tibet which was first published 50 years ago and, in my opinion at least, was the best Tintin book of the lot.

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)?

Now that the World Cup is nearing its conclusion, isn’t it about time that you got round to more pressing affairs?

For those who haven’t yet entered the Pensions Management Technology, Administration and Service Awards 2006, there is very little time to get your entry in to be judged.

The importance of the use of technology has never been greater, particularly with the large number of legislative changes to pension schemes in recent years and the growing complexity of pension provision.

This category is traditionally one of the most fiercely contested in the PM Awards and this year was no exception. The UK’s largest scheme includes some of the biggest names from the public and private sectors, and many can point to a wide range of achievements that show how they are serving their members and adapting to changing circumstances.

As the burden on trustees increases, so too does the potential for conflict between trustees and employers – and sometimes they’re the same person. Paul McGlone looks at how to keep the relationship harmonious

UK Social Investment Forum chair Steve Waygood tells Ruth Emery about how he believes the UN’s Principles for Responsible Investment could change the global industry for the better

Money-back annuities have been around for several years, but have they really solved the age old issue of balancing income against death benefits? And what does value protection offer? Billy Burrows gives his views

Neil Sutherland tells you all you need to know about avoiding the pitfalls and uncovering the value in the corporate hybrids market

PM talks to TUC general secretary Brendan Barber about the council’s response to the pensions white paper and the implications of compulsory employer contributions for British industry

Our panel of experts debates how and why IFAs and their clients should look more closely at using hedge funds more extensively within Sipp portfolios

Wraps: everybody’s talking about them. But how many wrap platforms can the UK sustain? And who will be the overall winners? Colette Dunn of Watson Wyatt reveals the results of the company’s recent debating forum

Jeremy Taylor takes a detailed look at the the government’s pensions white paper, and examines the differing responses from business organisations

The property market doesn’t end with the UK. Ruth Emery looks at how investor-friendly overseas opportunities from Asia to Scandinavia are catching the attention of pensions experts

With more responsibility and less time spent on investment issues, the focus on trustees has never been greater. And the government may not be helping matters, says Terry Mellish

New Zealand’s proposed pension scheme is being seen as a possible influence on Lord Turner’s NPSS plan. Gregor Watt tests this theory in PM’s latest foreign investigation

David Trenner answers this month’s questions regarding a widower who has recently sold his business and wants to boost his son’s pension fund when he dies

Simplification seems to have had the opposite effect on small self-administered schemes. Hamid Nawaz-Khan looks at how the situation has changed since A-day

The RSPA was formed in 2001 with the intention of raising standards of pensions administration. Retiring trustee and secretary David Herbert reports on the progress so far

Property performance forecasts are being revised upwards, continuing the sector’s strong showing over the past two years. Paul Herrington looks at what the future holds for the sector’s key markets

Ian Ratoff looks at whether the continued trend of fund managers outsourcing their middle and back office functions is having any effect on pension funds

Vince Linnane is the new chief executive of the Pensions Management Institute (PMI), replacing Roger Booth.

Francis Ghiloni, head of Prudential’s intermediary business, has quit the group after six months in the role.

The Association of British Insurers has created a pensions and savings strategy committee, filled with some of the most influential pensions experts in the industry, to oversee its work in ensuring private saving is boosted to meet future needs in retirement.

Laurie Edmans, director of corporate development at Aegon, is leaving after six years with the company for an independent consultancy role.

Defined contribution (DC) has been an issue of constant debate for as long as I’ve been writing in this sector, but now it really has arrived.

1. In the UK we’ve relied on lifestyle as the core investment option for DC members, and it is not a bad option as it gets the basic asset allocation right for the majority of members. More recent investment thinking involves either setting target levels of retirement income and ‘banking’ any excess gains in index-linked gilts or creating a ‘new balanced’ fund that allows access to alternative asset classes, more normally associated with DB asset allocation, such as hedge funds, commodities and property, within a single fund structure. Neither of these are overly sophisticated investment ideas, but care needs to be taken with communication.
2. Choosing whether or not to have a default option, and deciding on the default option if there is one is probably the most important element. Evidence from UK DC schemes shows that most of the money in most schemes goes into the default option and so this will have a big effect on the financial future of the members. The next big decision is how many funds to offer, and there is a fine balance between offering members sufficient choice so that they can meet their investment objectives and overwhelming them with a vast array of options, which will only lead to confusion.
3. In my view, moving towards automatic enrollment and automatic savings programmes, where the amount a member pays automatically increases in line with their salary, will make the biggest difference to participation and contribution rates. A good communication campaign stressing the benefits of joining and the need to pay more can have an effect on raising member awareness, but will not necessarily translate into action as apathy and procrastination are key forces to be reckoned with.
4. I think the impact of NPSS could go in one of two ways. The doomsday scenario would be that all occupational DC savings revert to NPSS levels and that employers see no reason to pay anything extra into a pension plan. The other, more positive scenario is that NPSS provides a base level pension and many employers choose to offer benefits in excess of these levels as they know that they will be valued by employees as the NPSS is seen as very much a minimum benefit.

1. The defined benefit schemes market is generally mature with vast assets under management, compared with a relatively small defined contribution market that will grow substantially as more employers cease DB accrual and offer DC benefits for the future.
   DB investment strategies depend on existing levels of funding, projected future liabilities and assumed cash outflow to pay benefits. These factors together with the trustees’ attitude to risk will determine the investment mix of equities, bonds, property, cash and so on.
   DC schemes should ideally offer a range of ‘best of breed’ funds that provide choice as regards risk and reward, recognising the period of investment could range from five to 45 years. I expect DC investment strategy to be an area of rapid development over the next few years and concepts developed for DB will be adopted for DC schemes.
   There will be more focus on communicating sophisticated investment ideas in a simple and understandable way.
2. Investment strategy should be constructed for each client. The funds offered should have regard to the level of sophistication of the workforce and their knowledge of financial markets. Once the investment sectors are determined, best of breed funds should be offered to members.
   The importance of the default fund depends on the sophistication of the members. Where appreciation is low and people are uncomfortable in making decisions, the default fund is vital.
   The default fund is typically lower risk to protect members’ capital and it allows contributions to be invested promptly. Members using default funds should be reminded regularly of the other funds available to them.
3. By far the most effective strategy to encourage employee participation is for the employer to make a significant regular contribution, ideally at least 4% of pay. Experience suggests take-up rates of 80% to 90% where the employer contributes.
   Second, holding employee group enrolment meetings in work time are valuable. The adviser explains the benefits of the scheme and deals with questions. Endorsement by the union representing the workforce can be very helpful.
   Third, clear and simple information is vital to explain the benefits of joining. For example, income tax relief, tax free cash at retirement and death in service benefits.
4. The white paper states NPSS will be launched in 2012. It could be delayed if the government opts to develop its own computerised systems for enrolling members and managing the scheme. Further, employer contribution will start low and build up to 3% of relevant earnings by 2015.
   The industry cannot allow a planning blight until 2012. The savings shortfall must be tackled now through the development of employer sponsored schemes. NPSS contribution rates should be regarded as the minimum floor.
   Higher rates are needed to achieve decent private pensions in retirement, and we need to regularly reinforce this point with employers.

1. DC investment strategies to date have been more closely aligned with the options of savings plans. We are now starting to see the introduction of investment funds to DC arrangements which are more akin to the investment funds more traditionally used in DB arrangements.
   With the reduced levels of individual member advice, there is an increasing trend in the provision of sophisticated asset allocation strategies pre-packaged as lifestyle switching options designed to move scheme members into less volatile investment in the years immediately preceding their retirement. These strategies are increasingly becoming part of the core product offering from providers.
2. Investment strategy must aim to provide appropriate investment diversification for members with the aim of providing an efficient risk/return profile. This approach must also have an ongoing formal governance process incorporated. Having a default option will always be important for members who do not want to make an active investment choice.
3. The first driver for scheme take-up and increased contribution levels is advice. The second driver is simplicity of member participation and keeping the product featured as simple as possible. The third driver is effective information for members to demonstrate the ongoing value of their pension plan, together with meaningful tools to allow the member the ability to understand what their plan will/can deliver in the future.
4. It is still very unclear at this stage the impact NPSS will have on occupational DC pensions savings. We are already seeing a move away from DC schemes and it is likely that NPSS will mean a continuation of this trend.

Employees have little understanding of how their DC scheme works, so how can they be sure that their scheme is suitable for them and will enable them to achieve their objectives? Pádraig Floyd reports

The public must be convinced of the importance of saving and have complete confidence in the industry if they are to accrue sufficient funds to retire on, says Jeremy Ward

Ann Flynn finds that as schemes move from defined benefit to defined contribution, members are having to get used to the idea of being responsible for their own pension performance

Research from across the Atlantic has identified three distinct categories within the workforce regarding attitudes to pensions. Emma Douglas identifies what the UK could learn

As the excitement of the recent world cup finals slowly ebbs away, many will reflect upon the event and wonder – perhaps quite rightly – what all the fuss is about. After all, 32 teams from all over the globe vying for the attention of the media and the fans and for what? To be told they’re the best in the world.

More than 300 members of the industry flocked to the Park Lane Hotel for the awards ceremony. Here we celebrate in pictures the deserving winners in the investment category

A steady stream of triumphant winners kept the champagne flowing at the Park Lane Hotel on May 11. Here we celebrate the winners in the service category

The PM Provider Awards 2006 recognises those who demonstrate a commitment to outstanding service to their clients. Over the next four pages we list the winners

D. William Kohli traces the past 20 years of global fixed income investing, and outlines why a top-down strategy is no longer the way to get the best from the asset class

Not every company puts the client first. Here we list those the judges deemed worthy of recognition in the service category of PM’s Provider Awards 2006

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