DC Pensions Update | December 2019
- 02 mins 24 secs
In this update, Olga Hay discusses the halt of defined benefit schemes for new Unilever members, the authorisation of Salvus Master Trust by The Pensions Regulator and asks whether the contribution rules on the general levy are fit for purpose.
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Hello and welcome to DC Pensions news update.
In this bulletin:
Unilever is planning to stop offering DB to new members, the pensions regulator has authorized Salvus Master Trust and.. Are the contribution rules on the general levy fit for purpose? The People’s Pension thinks not.
But first, Unilever has seen the costs of its DB pension scheme rise some 75% in a year and is looking to take action.
Under the proposed changes, Unilever will not be offering a DB pension scheme to new members; while existing DB members will earn benefits at a reduced rated. Unilever also wants to move to a more flexible package of benefits, calculated at 25% of pensionable earnings before tax that members can pick from. The proposed changes are subject consultation with employees and trade union representatives.
Salvus Master Trust has become the 37th and final existing master trust that’s been authorised by the Pensions Regulator. It has 200 million pounds in assets under management and is a workplace scheme open to all employers.
As a result of TPR authorization process, the market has been reduced by 60% from 90 to 37 master trusts. However, despite applications closing to existing master trusts, new trusts can still apply to enter market at any time.
The People’s Pension is warning that master trusts are liable for a quarter of the general levy despite holding only 2% of assets. Currently the general levy is calculated on the number of members in a scheme rather than the value of the assets. The People’s Pension argues the current scheme is not fit for purpose, as master trusts pick up a disproportional share of the bill because their members include millions of low earners.