The Financial Conduct Authority (FCA) has published interim findings of the Retirement Outcomes Review, the first major comprehensive study into how the retirement income market is changing since the pension freedoms were introduced. The review considered how the income market is developing, focusing mainly on those who do not take any advice.
They found that consumers welcomed the pension freedoms and over one million defined contribution pension pots had been accessed since the reforms took place. The early access of pots has resulted in 72% being accessed by consumers less than 65 years of age – most of whom took lump sums. Over half of the accessed pots have been fully withdrawn and over half of these have been transferred into savings or investments. No evidence was found of persons being careless with their pension savings.
Since inception, tools have been developed to help consumers understand the changes. In addition simpler flexi-access drawdown products, which consumers can buy without taking financial advice, have been introduced.
The review found however, that the market is still growing and adjusting to the changes, leaving certain issues identified - those who withdrew their pots did so partly because of mistrust of pensions and they accepted the drawdown option offered by the pension provider without shopping around; 30% did not take advice on how to manage the drawdown and, as the decision is complex, it is questionable whether further support is required.
It was found that some annuity providers were leaving the market, reducing choice for consumers and weakening competiveness. This could result in more charges/tax being paid, consumers investing unsuitably, missing out on valuable benefits or running out of savings sooner than expected.
The FCA has stated that they will carry out further assessment of the harm these issues may cause and consider remedies.
Commenting on the interim finds of this review, Tim Gosling – Policy Lead of the Pensions and Lifetime Savings Association – said,
"The FCA's interim retirement outcomes review makes for disturbing reading. Without timely action now, those retiring in the near future who are dependent on defined contribution (DC) pots and who have no access to advice will not receive the retirement they hope for.
“We need two things. First, we need a smoother customer journey at retirement that makes the line of least resistance an income product rather than cash. This may mean a form of "soft" default, intended to preserve consumer choice but designed to connect savers to the income 84% say they want1.
“Second, we need a new generation of high quality retirement income products. These need to have strong independent governance and be suitable for those needing an income but who do not have access to advice. Government and the FCA should be mindful of lessons learnt in the workplace pensions market after the 2013 Office of Fair Trading Report to ensure product quality and also ensure they are open to fresh thinking about how to stimulate the development of new products.
“Over half (52%) of fully withdrawn pots have not been spent but moved into other retirement savings or investment vehicles – with associated tax, investment and benefit risks. The report suggests that this may be due to lack of public trust in pensions so we need to work hard to address this issue by helping the industry to evolve to meet the expectations of consumers saving for and transitioning into retirement.
“The industry does not have long to get this right."
According to a preliminary report issued by Canadian air safety regulators, on July 7th Air Canada flight AC759 from Toronto came close to crashing into planes lined up to take off at San Francisco International Airport.
The plane, with 140 people on board, was cleared to land on runway 28R just after midnight. However, the pilot inadvertently lined up for Taxiway C, which runs parallel to the runway with fewer than 150 metres separating the runway from the taxiway.
In their short summary of the incident, Canada's Transportation Safety Board (TSB) estimated that the A320-200 overflew the first two aircraft by 100 ft., the third aircraft by 200 ft. and the fourth by 300 ft. The closest lateral distance to one of the aircraft was around 29 ft. The summary also said that the Air Canada Flight had already travelled almost a quarter of a mile over the taxiway before aborting the landing.
In a transcript of the conversations between air traffic control (ATC) and the Air Canada plane, the pilot informs ATC that he can see lights on the runway, before being told there are no other planes on 28R. Other voices then say "Where's this guy going? He's on the taxiway." When ATC realizes the plane is lined up with the taxiway, it directs the pilots to perform a go around and approach again. On the second attempt it landed without incident.
The FAA and US NTSB are looking into what happened and an Air Canada spokesperson said the airline is also investigating the incident.
Brexit negotiations have only just begun but already the UK is starting to feel the effects of skills shortages in the labour market.
The latest CIPD/Hays research found that three-quarters of HR professionals are already experiencing recruitment difficulties and - as a result of the UK’s decision to leave the EU - they expect competition for well-qualified talent to increase over the next three years. As a result, they have highlighted the need for smarter, more targeted recruitment strategies, such as combining in-house and outsourced approaches. If used well, this can be a positive resource for HR teams particularly when they require larger volumes of recruits as it can lessen the burden of administration.
Data from the survey shows that employers are endeavouring to use many options to increase their labour supply, especially in relation to younger applicants. These include increasing the skills in their existing workers; offering apprenticeships; work placement and work experience schemes and developing a close relationship with schools and colleges.
The Resourcing and Talent Planning survey reports that there is an added cautiousness in prospective candidates and around the same proportion of increased cautiousness in businesses recruitment. Three-fifths of businesses also anticipate that as a result of the Brexit vote, they will experience increased difficulty in recruiting senior and skilled/ technical employees, whilst two-fifths anticipate increased difficulty in recruiting operational staff.
However, the survey shows that despite the Brexit decision, when it comes to employing migrants the proportion of businesses anticipating that they will recruit EU migrants in 2017 is similar to that of 2016 across all sectors.
According to the latest Labour Market Outlook findings, approximately 12% of private sector companies are considering locating their business operations abroad - with the Republic of Ireland, Germany and France as the most popular destinations.
According to a new survey by PayScale, women being interviewed who will not reveal their salaries tend to earn an average of 1.8% less than women who do disclose their compensation.
Lydia Frank, vice president of content strategy at PayScale, which provides compensation data and software, states "There's a lot of research out there around unconscious bias that shows that we expect women to be cooperative and collaborative, so when a woman refuses to answer that question, it could rub people the wrong way."
Between April and June, PayScale interviewed 15,413 job applicants and the survey asked the following question:
At any point in the interview process, did you disclose your pay at previous jobs?
The replies received were:
- No, and they did not ask.
- No, but they asked.
- Yes, they asked about my salary history.
- Yes, I volunteered information about my salary history.
- I do not recall.
PayScale analyzed the responses by industry; job title; job group; job level; gender; age and income bracket - it was found that when it came to job groups, 44% of those applying for jobs in HR, 43% in marketing and advertising and 40% in accounting and finance were the most likely candidates to disclose salary history during an interview.
Lydia Frank said "With HR, if you've been on the other side of the table discussing compensation with candidates, where salary history is something you asked of candidates, being asked yourself might feel pretty typical."
Of the applicants for C-suite jobs, 40% said they were asked about their compensation whilst 26% refused to answer the question. However, when job candidates did refuse to say what they earned, they tended to earn more than those who revealed their salaries.
"When it comes to higher-paying positions, an employer doesn't want to waste anyone's time - theirs or yours," Lydia Frank said. "….so making sure you really understand salary expectations for those roles makes a ton of sense." Where executive-level candidates had a tendency to sidestep the question, "….that has to do with confidence," she said and added, "If you know your skills are sought after and you're at a level in your career where you're in a highly paid role, you probably know your value and are more confident in saying hey, I don't really want to talk about my salary, I want to talk about the position and what the role is worth.”
When it came to industry, those most likely to be asked about their salaries were people applying for jobs in finance and insurance - 45% and 49% percent of the applicants revealed their compensation.
However, when it came to the older applicants they were more likely to refuse to disclose what they earned. The survey showed that 28% of baby boomers refused to disclose their salary histories when asked; 22% of members of generation X refused and 18% of millennials also refused.
Lydia Frank remarked that by forbidding the question in the first place, women won't be put in the position of having to refuse to answer and said, "That's absolutely the advice we're giving to employers: Don't ask the question and put candidates in an awkward position of having to decide whether to answer. It's easy enough to switch to 'salary expectations,' and that's really what the employer and candidate should be talking about anyway-the market rate for the position, not an individual's salary history. If salary history does manage to influence the offer then that could lead to internal pay inequities and employee turnover."
In at least six states or cities the question of salary history being asked by prospective employers has been banned - or the possibility is being considered. Delaware; Massachusetts; New York City; Oregon; Philadelphia (effective May 2017, but delayed pending litigation) and Puerto Rico are those already banning or planning to ban, whilst California is considering similar legislation.
On 7th July, Bell Helicopter announced that it has resumed flight tests on the Bell 525 Relentless. This comes after the Federal Aviation Administration (FAA) agreed to renew their experimental certificate.
The test fleet was grounded on 6th July 2016, after the initial test flight crashed, causing fatal injuries to two test pilots. The crash, which is still being investigated by the National Transportation Safety Board (NTSB) happened during visual flying conditions. Mitch Snyder, president and CEO stated “Bell Helicopter has worked with the National Transportation Safety Board (NTSB) and FAA since the accident and we are confident in the resumption of flight test activity.”
Bell, a Textron Inc. Company, launched the five-bladed 525 in 2012 and is aiming for it to become the world’s first fly-by-wire commercial helicopter. Initially planned for certification in 2017, it is designed to decrease pilot workload and be able to operate safely in austere environments. The aircraft utilizes advanced technology including the first fully-integrated touch screen avionics for helicopters and is now slated to be certified in 2018.
Mitch Snyder stated “The team is focused on certification in 2018 and we are committed to bringing this innovative and high-performing helicopter to market.”
Following an incident with an Emirates Airbus A380 on November 9th last year, Europe’s safety authority (EASA) has proposed that checks should be carried out on the gravity extension system on all Airbus A380’s landing gear.
The Emirates flight was en route from London to Dubai with 345 passengers, when the crew received a hydraulic system overheat warning. In response, they isolated the green hydraulic system, meaning that the undercarriage had to be deployed using the backup procedure, free-fall gravity extension.
However, when the crew tried to deploy the landing gear, the left wing gear failed to extend properly and even though the gear doors had opened, it stayed up and locked. Although the crew declared an emergency, the aircraft touched down safely in Dubai using its remaining landing gear.
The incident prompted the United Arab Emirates Air Accident Investigation Sector (AAIS) to call for a mandatory A380 fleetwide inspection and Airbus subsequently issued an operator alert and developed a modification.
EASA are advising that aircraft which have not had this modification should have the gravity extension system on the wing landing gear tested, as well as repeatedly inspecting the wiring. Should the testing uncover any anomalies then their proposed airworthiness directive (AD) states the operator must carry out Airbus’s corrective measures before it goes back into service.
The US Department of Labor alleged that a Florida manufacturing business in Flagler County is guilty of Profit Sharing Plan embezzlement and filed a complaint against the company and its owner. According to the allegations the owner embezzled $111,624 between January and June 2009 from the company Profit Sharing Plan.
United States Attorney A. Lee Bentley, III has now announced that the 63-year-old owner, from Volusia County, has pleaded guilty to embezzlement from an employee benefit. According to the plea agreement, the owner embezzled all of the funds from the business’ corporate Profit Sharing Plan and unlawfully used the pension funds to pay personal and other unrelated corporate expenses. She used some of the funds to pay personal investment obligations in another company she co-owns. The corporate Profit Sharing Plan was a federally protected plan under the Employee Retirement Income Security Act (ERISA).
In 2009, the manufacturing company was having financial issues. To meet the company’s payroll; pay vendors; fulfil the company’s mortgage payments and pay the financial obligations of her unrelated company, the owner of the manufacturing company made 15 separate and illegal electronic funds transfers from the company’s Profit Sharing Plan’s account. This was carried out by electronically transferring funds from the Plan’s account to the company’s operating account. Checks were then written from the operating account to cover personal and business obligations. As a result, the employees’ Profit Sharing Account was depleted.
The owner and another were held to be jointly liable and, as a result, are permanently banned from acting as a fiduciary, trustee, agent or representative for employee benefit plans (as defined by the Employee Retirement Income Security Act of 1974) in the future. In addition, they have been ordered to pay restitution plus an additional $25,253 in interest on lost earnings.
The U.S. District Court for the Middle District of Florida Jacksonville Division, appointed administrators to terminate the Plan, collect and administer the Plan’s assets and make distributions to the affected participants.
As NASA gets closer to testing sonic-boom mitigation technology on a demonstration aircraft, so the ability of supersonic passenger jet travel becomes more of a reality.
NASA recently announced that in conjunction with Lockheed Martin, it has completed the preliminary design review (PDR) of its Quiet Supersonic Transport (QueSST) aircraft design. QueSST is the initial design stage of their low boom flight demonstration (LBFD) experimental airplane, known as an X-plane.
However, in order to make supersonic travel over land (prohibited since March 1973) happen, a repeal of the existing ban would also be needed. Currently, the House and Senate versions of FAA reauthorization bills both include measures whereby the FAA would be directed to study, and if necessary update, the regulations surrounding supersonic travel.
Rep. Mark Sanford (R-South Carolina), sponsored a measure as an amendment to the House FAA reauthorization bill. The measure directs the FAA to obtain stakeholder input on an appropriate regulatory framework and timeline to permit civil supersonic aircraft operations; issues related to standards and noise certification; operational differences between subsonic and supersonic aircraft; benefits of supersonic operations; and challenges with balancing economically reasonable policies with protecting the public from noise exposure. It further directs the FAA to report back to Congress within a year on its activities.
“It’s vital that we change with the times,” Sanford said. “Over the last 45 years, since there’s been a moratorium on supersonic flight over the domestic U.S., the technology, in fact, has changed. It’s changed dramatically.”
Included in the Senate FAA reauthorization bill is a direction to the FAA to review laws and policies regarding supersonic aircraft operations over land. Within 180 days they must submit a report to Congress noting advancements in aircraft/engine design that would alleviate noise and other concerns that led to the restrictions and previously meant that Concorde, the supersonic airliner, had to slow to below Mach 1 before making landfall on its transatlantic flights.
Engineers from Lockheed and NASA are continuing to finalize the QueSST design but are apparently confident that eventually flight at supersonic speeds - but producing only a soft “thump” instead of the distinctive sonic boom - will be capable.
Flight operations in the F-35A at Luke Air Force Base, Arizona which had been cancelled after 5 reported incidents of hypoxia, or oxygen deprivation, have now been resumed.
Although experts from the Joint Program Office, the Air Force Research Laboratory and Lockheed Martin could indentify no definite reasons for the symptoms, classed as physiological episodes (PE’s), Maj. Rebecca Heyse, a spokeswoman for Luke Air Force Base, did state that "....specific concerns were eliminated as possible causes, including maintenance and aircrew flight equipment procedures."
Fortunately, in each of the 5 incidents a back up oxygen system kicked in, leaving the pilots unharmed. However, whilst flight operations have been allowed to resume, five criteria are temporarily applied. These include avoiding the altitudes in which all 5 PE events occurred; modifying ground procedures to mitigate physiological risks to pilots; expanding physiological training to increase understanding between pilot and medical communities and increasing minimum levels for backup oxygen systems for each flight.
Additionally, pilots have been offered the option of wearing sensors during flight to collect airborne human performance data.
These sensors, received by the U.S. Air Force School of Aerospace Medicine, are made by Cobham, a British company and test the composition of inhaled and exhaled air flowing into a pilot's mask. Although the symptoms of hypoxia can be observed, finding the cause of it has been described by Julian Hellebrand, (president of the Cobham's mission systems sector) as putting together a “mosaic of events”. The company therefore hope that the data gathered by the masks at those two places can be analyzed to pinpoint any problems.
In a press release Cobham stated “The delivery of this inhalation sensor block marks the first step towards creating this mosaic by capturing temperature and pressure data inside the cabin, and the flow rate and concentration of oxygen being supplied to the pilot with each inhalation breath.”
Affluent male pensioner’s life expectancy is rising faster than other groups - as revealed by a new longevity trends report published by the Pensions and Lifetime Savings Association (PLSA) in conjunction with longevity experts, Club Vita.
The report suggests that this trend could have major implications for Defined Benefit (DB) pension schemes, as over half of their liabilities will be in this group - showing that a scheme with a high proportion of more affluent members might need to make more provision than a scheme with a more mixed demographic.
Between 2011 and 2015 men in this group continued to have rapid rises in longevity - gaining 17 weeks of life expectancy and maintaining the increasing trend from the previous 10 years, whilst other groups saw no increases. In contrast, for men on a modest retirement income and those who are living in deprived areas on a low income, life expectancy has remained unchanged since 2011.
The importance of having an insight into the economic dynamics of longevity trends has never been greater. Recent differences in life expectancy amongst socio economic groups is likely to be caused by a combination of factors - harsh winters, flu, access to social care and economic slowdown, to which issues the affluent group have proved to be more resilient.
Steven Baxter, Head of research for Club Vita states, “.......Trustees of DB schemes are faced with tough decisions to make. Standard actuarial projections have shown a slowdown in rising life expectancy and some have even questioned whether DB schemes should be funding for future, uncertain increases in longevity. However, our evidence that life expectancy is still rising at the same pace amongst affluent males is highly significant.”
He continues, “While the nation has seen a slow-down in rising life expectancy over recent years our analysis has shown that men in ‘comfortable’ socio economic groups are, in contrast, maintaining a consistently rising life-expectancy. There has been a divergence in longevity expectations between these groups and the lower socio-economic ‘making do’ and ‘hard pressed’ groups, with the longevity improving twice as fast for the ‘comfortable’ group. At a societal level it is concerning to see a halt in the narrowing of the longevity gap amongst different parts of society that we had seen previously.”
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association (PLSA) commented that trustees have to take a view on the longevity outlook for the future and this report was designed to help them with decision-making and scheme management.
A variety of state statutes and legal concepts have limited damages in personal injury cases.
The Supreme Court of Florida has backed the ruling made by a lower court that caps on non-economic damages (in the case of medical malpractice) violate the Equal Protections Clause of the states constitution.
This decision was made after a lawsuit was brought by a woman who suffered a complication after surgery at North Broward Hospital District.
During intubation in the administration of anesthesia, the patient's oesophagus was allegedly perforated and – despite complaining of chest pain – her condition was not fully discovered until the next day when she had to undergo emergency surgery to repair her esophagus. However, the complaint stated that she had never regained her full health and she was awarded $4 million in non-economic damages by a jury.
Non-economic damages are injury damages for various types of pain and suffering and loss of enjoyment of life damages. They are unlike economic damages in that a jury does not base a plaintiff’s non-economic damage awards on past losses and future calculations but makes a more subjective evaluation.
In the case of the Florida plaintiff, the trial court had issued a final written judgment that limited the non-economic damages by the caps defined in the Florida Statutes, which resulted in the award being reduced by about $2 million. Added to that, the court ruled that a further $1.3 million should be taken off the amount as the hospital's share of liability was capped at $100,000.
These caps were originally put into place to reduce the cost of malpractice insurance, but the Supreme Court justices wrote that putting the caps in place did not prove that insurance premiums were reduced and drew the conclusion that the caps were illogical “......because of the arbitrary reduction of compensation without regard to the severity of the injury does not bear a rational relationship to the Legislature's stated interest on addressing the medical malpractice crisis.” The court also concluded that the statutory caps were unreasonable and arbitrarily limited rewards for those who were grievously injured by medical negligence.
Justice Ricky Polston disagreed and stated that the Legislature did what it had to do to ensure the quality and availability of health care for the residents of Florida. He also stated that if the policy of caps on non-economic damages affected insurance premiums, it was immaterial and concluded by saying that it was not the place of the majority in the court to change a statute or policy that it did not like and wrote that doing so “improperly interjects the judiciary into a legislative function.”
Many states have non-economic damage caps for medical malpractice cases and a smaller number, less than a quarter, of states have in place non-economic damage caps for any personal injury claim. However, the damage cap laws all make exceptions, either permitting a higher damage cap or eliminating it, for cases involving death and serious injury such as the loss of a limb or organ.