7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• Council of the EU adopts PEPP regulation
• FCA announces further action on DB transfers
• PLSA launches new ESG and stewardship guidance for pension fund trustees

Council of the EU adopts PEPP regulation

On 14 June 2019, the Council of the EU adopted a regulation which is intended to provide greater choice for people who wish to save for their retirement, expanding the market for personal pensions through the creation of a “pan-European personal pension product” (PEPP).

The regulation will come into force 20 days after its publication in the Official Journal.

FCA announces further action on DB transfers

On 19 June 2019, the FCA published the results of the data it has received from firms carrying out DB transfers and set out the next steps in its supervisory work.

The FCA is concerned that firms are recommending that large numbers of consumers transfer out of their DB pension schemes despite the FCA’s stance that transfers are likely to be unsuitable for most clients.

The FCA surveyed 3,015 firms and found that between April 2015 and September 2018:

• 2,426 firms had provided advice on transferring DB pensions
• 234,951 scheme members had received advice on transferring. Of those, 162,047 members had been recommended to transfer out
• the total value of DB pensions where transfer advice had been provided was £82.8bn, with an average value of £352,303
• 1,454 firms had recommended 75% or more of their clients to transfer (however, some firms may show high numbers of clients being recommended to transfer as they operate an effective ‘triage’ (initial guidance) service, which filters out those not wishing to transfer as a result of an initial discussion
• 1,346 firms reported data on clients (59,086 in total) who had not proceeded past the firm’s initial guidance.

The FCA now aims to focus its supervisory work to “drive up the quality of advice”, and has started to visit firms. These visits are intended to allow the FCA to complete a full assessment of the firms’ approach to DB advice, focusing on key aspects of firms’ business models and processes which could give rise to harm.

The FCA will also be writing to all firms where it has identified the potential for harm. These communications will set out the FCA’s expectations and the actions firms should take.

PLSA launches new ESG and stewardship guidance for pension fund trustees

On 18 June 2019, the PLSA published a guide which aims to help pension funds comply with new ESG requirements coming into force from 1 October this year, and to support them in achieving good practice into the future.

For further information or to organise trustee training please contact Stuart O’Brien (who was involved in the development of the guide).