No-deal Brexit a possibility as McVey and others quit

The Brexit-supporting MP for Tatton declared she was unable to support Prime Minister Theresa May's draft EU withdrawal agreement on Thursday morning, the day after ministers were presented with proposed terms.

Trustees should have been and certainly should be, between now and March, putting into place actionable contingency plans

Alex Hutton-Mills, Lincoln Pensions

In her letter to May, McVey wrote; "The deal you put before the Cabinet yesterday does not honour the result of the referendum. Indeed, it doesn't meet the tests you set from the outset of your premiership."

A key sticking point in the agreement for Brexiteers has been the use of a 'backstop' of effective customs union membership, to ensure no hard border is installed between Northern Ireland and the Republic of Ireland or in the Irish sea, in the event that a solution cannot be found.

Brexit secretary Dominic Raab and several junior ministers also quit, dealing a severe blow to hopes of avoiding a no-deal Brexit and to the longevity of May's premiership. Sterling dipped sharply against the dollar on the news.

The resignation leaves the top spot at the Department for Work and Pensions vacant for the fifth time since Iain Duncan Smith quit in 2016. The DWP is expected to push through a large pensions bill in late 2019 and is currently consulting on a wide range of changes to the regulatory environment.

DWP bosses have resigned before and a temporary vacancy is unlikely to derail the government’s pensions priorities, according to Steve Webb, Royal London’s director of policy and former pensions minister.

The most influential factor on pensions “isn’t who’s sitting in Caxton House, it’s the economy”, he said.

However, with May’s deal lacking the support of either the opposition Labour party or a significant chunk of her own party, pensions commentators were beginning to consider the impact of a no-deal Brexit on pensions.

Webb raised the prospect of gilt yields dipping and pushing up defined benefit deficits, while Alex Hutton-Mills, managing director at covenant advisory Lincoln Pensions, said the impact will be highly specific to individual businesses.

“No deal is certainly foreseeable now,” he said. “[Trustees] should have been and certainly should be, between now and March, putting into place actionable contingency plans.”

He said schemes whose sponsors are part of an international group might want to strengthen their claim on support from overseas parents, and in the retail sector trustees may explore the use of contingent assets.