Cost Control Mechanism Consultation:
proposal to reform the mechanism, published by the Treasury late last week. It sounds more like a surefire insomnia remedy than a gripping page-turner.
In short, the cost control mechanism is used to determine if pension scheme costs have deviated too far from target. If they have, scheme benefits can be increased or decreased to bring costs back in line.
The intention was for those adjustments only to be triggered by “extraordinary, unpredictable events”. So, when the 2016 pension schemes valuation the first time the mechanism had been properly put into practice called for improved benefits despite significant cost increases, the government handed its actuaries their notebooks and asked for their help coming up with something which didn’t lead to as Nikki Ayriss, a partner at LCP, points out “unintuitive and perverse outcomes”.
5
th March 2021 9:30 am
Good morning and welcome to your Morning Briefing for Friday 5 March, 2021. To get this in your inbox every morning click here.
RL pension sales down 20% due to lockdowns
It is a tough time in the world of pensions and advisers based on results out from mutual Royal London today.
Life and pension sales at the mutual dropped 20 per cent last year due to lockdowns as advisers were forced to change their business models.
Overall new life and pensions business dropped to £8.5bn as at 31 December 2020 from £10.6bn as at 31 December 2019.
Broken down individual pensions new business sales decreased by 25 per cent to £4.7bn from £6.3bn in 2019.