The spectre of high profile pension deficit crises looms large, with the British Steel Pension Scheme (BSPS) and Carillion episodes still fresh in our minds.
But we’re also on the precipice of change, with new legislation incoming and measures proposed that could help to prevent history repeating itself.
The full extent of these changes is yet to be established but it seems a good point to take stock of where we are now and what lessons have been learned.
Certainly, members of final salary pension schemes face a squeeze.
Those fortunate enough to have a final salary or defined benefit pension entitlement, may find themselves in a scheme with a large pension deficit, such that it now faces very difficult ongoing funding decisions to ensure that it meets obligations to members.
Things are moving in the right direction but there’s only so much legislation can do and even that takes time to implement.
This was the case with the BSPS and there are many household name companies now facing deficits and trying to fill in the ‘pensions black hole’.
A recent report by Mercer has established that the combined deficits in FTSE 350 companies was £76bn at December 2017.
We would perhaps be naïve to assume that the BSPS is an isolated incident - the extent of the deficits in existing schemes would suggest there will others that will face equally difficult decisions - but even where a business has a plan in place to deal with the a deficit situation and is able to follow it through, they may not be able to prevent a significant number of members falling victim to pension scammers.
With the BSPS scenario, we also saw 25,000 members, for whatever reason, do nothing when asked to decide where they preferred their savings to go; arguably resulting in a less secure outcome for them than for those 83,000 individuals who actively took the decision to move into the BSPS II.
There has been a deluge of political and regulatory fallout resulting from the BSPS issues and the pensions deficit scandals that preceded it and, finally, the government seems willing to legislate to help mitigate against future risk.
News that the ban on pensions cold calling is being brought forward to this June is welcome.
As is the tabling of an additional amendment to the Financial Guidance and Claims Bill that will require schemes to make sure any customer wanting to access or transfer their pensions savings is “referred to appropriate pensions guidance”, and “has either received appropriate pensions guidance or has opted out of receiving such guidance”.
