After the hectic week the industry experienced last week, the past five days has been dominated by the fallout from market volatility caused by last month’s mini-Budget.

There were some positive steps taken in reaction to the market volatility, as industry experts looked to reassure defined benefit (DB) members that their pension benefits would remain protected and the report that UK DB pension scheme funding levels saw significant improvements over the past month.

However, this market volatility also prompted concerns over pension lifestyling funds, with analysis revealing that the average annuity-hedging fund had fallen by 38 per cent so far in 2022, although trustees were warned against a “knee-jerk reaction” to the volatility and encouraged to be properly prepared.

The cost-of-living crisis remained an issue this week as the Financial Conduct Authority (FCA) raised concerns that rising costs could leave Brits vulnerable to scams after research found that 25 per cent of savers would consider withdrawing money from their pension earlier than planned to cover the cost of living.

Research from the FCA found that around 44 per cent of savers would take up the offer of a free pension review, despite the authority identifying this as a “classic distraction tactic”.

The FCA also warned that scammers are also becoming increasingly skilled at producing fake websites and brochures as a distraction when carrying out their “trick”.

Also in reaction to the market volatility this week, the Work and Pensions Committee (WPC) wrote to The Pensions Regulator (TPR) requesting an update on its analysis of the volatility.

The market volatility prompted calls for DC pension scheme trustees to take action to support members in poor performing pre-retirement funds and DB pension scheme trustees to lock in funding improvements “as soon as they can”.

The Bank of England (BofE) said that it is "closely monitoring" the progress of liability-driven investment (LDI) funds, warning that some DB pension scheme LDI investments could have been worth "zero" without recent market interventions.

This week also saw concerns raised about automatic enrolment, with concerns that a moderate retirement living standard may be out of reach for many auto-enrolled savers and that access to auto-enrolment was “uneven” as higher contributions are targeted at those who are, arguably, least in need of support.

Concerns around auto-enrolment adequacy have also be heightened amid the cost-of-living crisis, with concerns that a moderate retirement living standard may be out of reach for many auto-enrolled savers, and that access to auto-enrolment was “uneven" as higher contributions are targeted at those who are, arguably, least in need of support.

Parliamentary Under Secretary of State for the Department for Work and Pensions (DWP), Alex Burghart, indicated that he was “sympathetic” to the idea that auto-enrolment could be extended to younger ages and lower earnings thresholds.

Also this week, an increase in professional trustees was discovered, as the year to July 2022 saw a 10 per cent increase in UK schemes appointing professional trustees and a 20 per cent increase in sole trustee appointments, with 43 per cent of pension schemes now having a professional trustee.

Meanwhile, the DWP launched a consultation on draft regulations, which require DC trustees to disclose and explain their policies on illiquid investment in their Statements of Investment Principles (SIP).

With the effects of market volatility showing no signs of stopping anytime soon and the cabinet’s habit of changing policy, it will surely be all eyes on the government as we eagerly await the official appointment of a new Pensions Minister and measures that might provide stability for the market.

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