In what is usually a subdued month for the pensions industry, this week saw several new topics of discussion break above the parapet, and a few unresolved issues rear their heads.

Despite the government being seemingly paralysed by the ongoing Conservative leadership battle, debate amongst those in the pensions sector continues as they look to assess the impact of the cost-of-living crisis and economic uncertainty on pension schemes.

The Pensions Regulator (TPR) sought to be on the front foot with a reminder to trustees and sponsors of what is expected of them when refinancing in the current economic climate. Refinancing could prove trickier as the business world looks to bounce back from the impact of Covid-19 and TPR sought to ensure that trustees understood their duties so members were protected.

The trustee/employer relationship was also in the spotlight in relation to defined benefit (DB) scheme funding levels, with RSM UK warning that a difference in perspective on large surpluses was potentially creating a disconnect between trustees and employer management. This came amid a DB funding update from the Pension Protection Fund (PPF), which showed an aggregate surplus of £254.3bn, down slightly from the £267.9bn surplus a month prior at the end of June.

This was not the only activity in the DB space this week, with the WH Smith Pension Trust completing a £1bn full scheme buy-in with Standard Life in one of the largest bulk annuity deals of the year so far.

The knock-on effect of the current economic environment on employment trends was likely to have an impact on the long-running issue of small, deferred pension pots, according to ZEDRA earlier this week. Defined contribution (DC) scheme trustees, providers and employers were urged to consider the impact of employer demand for staff in high-turnover industries and short-term roles, such as in hospitality, on the proliferation of small pots – an issue that seldom needs more catalysts.

Economic uncertainty that is fuelling the cost-of-living crisis is also causing people to dip into their pensions earlier than they planned. According to figures from Canada Life, 13 per cent of adults looking at ways to increase their income had either already accessed or planned to access their pensions earlier than expected, highlighting the role the industry needs to play in communicating that this must be an absolute last resort and shows how severe this crisis could become, not just now but also into people’s retirements.

It was another busy week in the pensions sector, which is likely to continue as the UK heads towards a likely recession and people look to make ends meet in whatever way they can.

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