January 2017 - Newsletter
Trump to build bridges with May
…Trump recently took to twitter to state his plan: “I look very much forward to meeting Prime Minister Theresa May in Washington in the Spring. Britain, a long time U.S. ally, is very special!”
May, who has already spoken to the incoming President twice by phone, has recently sent two senior aids on a secret tip to the US in mid-December to meet members of Trump’s team.
“The special relationship we have with the United States is an important relationship in terms of security and stability around the world,” May said in a recent interview on Sky News. “The conversations I’ve had, I think we’re going to look to build on that relationship for the benefit of both the United States and the UK and I think that’s something optimistic and positive for the UK for the future.”
In December 2015, May, whilst she was Britain’s Home Secretary, criticised Trump’s proposed ban on Muslims entering the US as “divisive, unhelpful and wrong.”
May stressed the significance she places on building links with the new White House as the UK seeks to expand trade with the US after it withdraws from the European Union.
This could be seen as an attempt to recover lost ground after she was out-flanked by her political rival Nigel Farage, the former UK Independence Party leader, who met Trump within days of his victory in November.
UK officials are said to be concerned by their poor links with the incoming US administration as Britain develops post-Brexit strategies. There are possible signs that Trump, who has a Scottish Mother, may be a willing partner. Previous US President Barack Obama said that Britain would be “at the back of the queue” to secure a post-Brexit trade deal with the US, Trump told Farage that Britain would be “at the front.”
Smaller firms back pensions for low-paid staff
...Since 2012, more than 7 million workers have been automatically enrolled into a workplace pension by their employer. Contributions from both employee and employer are a combined 2%, but are set to rise to 8% by 2019.
However, under current rules, those earning less than £10,000 per year, including millions of part-time workers, are excluded.
Even though most workers have the right to opt in to their company pension, this “earnings trigger” for automatic enrolment has led to millions of the lower paid, primarily women, missing out on an employer pension contribution.
The People’s Pension, a workplace pension provider which commissioned the poll, said it was surprised at the interest surrounding the development of automatic enrolment.
“SMEs are supportive of lower earners being brought into automatic enrolment,” said Darren Philp, Director of policy and market engagement with The People’s Pension.
“Their current exclusion affects part-time workers, more likely to be women, and their inclusion could over time go some way towards tackling some of the inequalities we have in our pensions system.”
The survey coincides with the Government beginning a review of automatic enrolment, which was introduced in 2012 to arrest a demise in workplace pension saving. It has committed itself to revise the earnings trigger, which has been frozen at £10,000 for 2018/18.
The YouGov survey also found that 37% of SMEs (small/medium-sized enterprises) were already paying more than the 1% minimum contribution to every employee in their workplace pension scheme.
Another finding of the aforementioned survey was that 60% of SMEs thought that it was fair that automatic enrolment applied to all employers, regardless of size. Automatic enrolment is gradually being rolled out to the smallest employers, having started with the biggest in 2012.
Nearly £82bn was saved into pensions last year, of which almost 60% was contributed by employers, according to data published in December by The Government.
Annuity market showing signs of recovery
...RBC is forecasting 5% annual increases in annuity market sales as a greater number of people retire with defined contribution pots and look towards annuities.
New annuity customers have also seen incomes grow thanks to an uplift in bond yields, RBC notes, which should have “slightly greater demand” as annuities become more appealing.
The RBC analysts also sounded a word of caution for firms caught up in the FCA’s recent review of annuity sales practices, arguing that they will lose market share to open market insurers such as Legal & General and newly-merged Just Retirement Partnership.
The note reads: “It is almost three years since the then UK Chancellor, in one breath, dealt the individual annuity market a hammer blow. While we do not expect volumes to recover to pre-2014 levels, we do see the green shoots of recovery.”
“The UK regulator has, in our view, already pushed the insurers who mostly sold their maturing pensions customer’s profitable annuities (namely Standard Life and Prudential) to compensate those customers for amounts they should have received. That business model is dead and we expect the open market insurers L&G and JRP Group will gain share.”
“Only insurers with pensions customers can be caught in this review. JRP has no pensions business so it cannot have any future liability; L&G did not have a large pensions book historically and it sold the majority of annuities on the open market, so we expect no significant impact.”
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