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
- The Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021
- The National Health Service Superannuation and Pension Schemes (Miscellaneous Amendments) (Scotland) Regulations 2021
- The Restriction of Public Sector Exit Payments (Revocation) Regulations 2021
- DWP delays response to trustee oversight of investment consultants and fiduciary managers consultation
- AE: DWP response to consultation on the alternative quality requirements for DB and hybrid schemes, and briefing paper
- European Commission adopts Delegated Regulations
- FCA publishes final guidance on fair treatment of vulnerable customers
- ICO launches data analytics toolkit
- Judicial pensions: MoJ publishes responses to consultations and briefing paper updated
- MAPS publishes interim report on pension guidance
- Uber: Parliamentary Insight on Supreme Court ruling, and report
- PDP blogs on identity service and market engagement update
- PPF publishes corporate restructuring documents, and CIGA 2020 guidance
- Pension taxation: PLSA and Treasury Committee reports published ahead of Budget
- WPC launches inquiry into pension savings
- UK agrees to EU proposal to extend provisional application of TCA until 30 April 2021
The Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021 were laid before Parliament on 24 February 2021. The draft regulations impose conditions on disposals in administration to connected persons and are expected to come into force on 30 April 2021.
The National Health Service Superannuation and Pension Schemes (Miscellaneous Amendments) (Scotland) Regulations 2021
The National Health Service Superannuation and Pension Schemes (Miscellaneous Amendments) (Scotland) Regulations 2021 were made on 22 February 2021 and come into force 1 April 2021. The Regulations make changes to the salary/earnings bands of the employee contribution tables in respect of the scheme year 2021/22.
The Regulations also amend provisions to remove the requirement to nominate co-habiting partners for survivor benefits following the judgment in Brewster.
The Restriction of Public Sector Exit Payments (Revocation) Regulations 2021 were laid before Parliament on 25 February 2021 and come into force on 19 March 2021. These Regulations revoke the Restriction of Public Sector Exit Payments Regulations 2020, which came into force on 4 November 2020 and imposed a cap of £95,000 on relevant exit payments (see 7 Days).
DWP delays response to trustee oversight of investment consultants and fiduciary managers consultation
The DWP has stated that the publication of its response to the consultation on trustee oversight of investment consultants and fiduciary managers and the final regulations are delayed and expects to publish its response by June 2022.
The regulations, which are intended to integrate an order produced by the CMA into pensions law, will:
- require trustees (subject to limited exceptions) to carry out a tender process for fiduciary management services and set objectives for their investment consultants
- allow TPR to oversee the requirements.
The DWP reminds trustees that until the new regulations are in force, trustees must continue to comply with the Competition and Markets Authority Order 2019 (see our Alert).
AE: DWP response to consultation on the alternative quality requirements for DB and hybrid schemes, and briefing paper
The DWP has published its response to its consultation on the alternative quality requirements for DB and hybrid schemes being used as a workplace pension under the AE regime, concluding that the requirements should continue in place without change at the current time. However, the DWP intends to work with organisations which have made suggestions on technical changes to the statutory guidance that supports the tests for DB and hybrid schemes, to explore what scope there might be for proportionate easements in the future. The next statutory review will take place in 2023.
On 25 February 2021, the House of Commons Library published a briefing paper looking at current issues in relation to AE. As well as summarising the development of the AE policy, the paper looks at hot topics in the AE regime, including employers’ AE obligations during the COVID-19 pandemic.
Following consultation in November 2020, on 24 February 2021, the European Commission adopted two draft Delegated Regulations supplementing the Regulation on a pan-European personal pension product (“PEPP”) (“PEPP Regulation”).
The first specifies the additional information that competent authorities must gather for supervisory reporting; the secondsets out criteria and factors for determining when exercise of EIOPA’s product intervention powers is warranted.
The next step is for the Council of the EU and the European Parliament to consider the Delegated Regulations and, if neither object, they will be published in the Official Journal of the EU and enter into force on the 20th day following their publication.
On 23 February 2021, the FCA published finalised guidance for firms on the fair treatment of vulnerable consumers, which sets out the FCA’s view on what firms should do to comply with their obligations under the Principles for Businesses and ensure fair treatment of such customers. The guidance defines a vulnerable consumer as “someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”.
The FCA expects firms to implement processes to evaluate where the needs of vulnerable consumers are not met. In 2023-24, the FCA will assess what action has been taken and whether it has seen improvements in the outcomes experienced by vulnerable customers.
The ICO has published a data analytics toolkit designed to be a basic introduction to the risks to individuals that data analytics may create or exacerbate. The toolkit covers processing under the UK GDPR and the law enforcement regime under the DPA 2018, and starts with questions to determine which legal regime an organisation falls under. It asks questions around lawfulness, accountability and governance, data protection principles, and data subject rights. The tool generates a tailored report and is anonymous.
The Ministry of Justice (“MoJ”) has published two consultation responses. The first is its response to the consultation on proposals for reforming the judicial pension scheme. As a result of concerns raised about the proposal to introduce a uniform member contribution rate, the MoJ will give judges the temporary option of reducing their contributions to the scheme in return for a commensurate reduction in the accrual rate.
The second is its response to the consultation setting out proposals for addressing the discrimination for non-claimant judges affected by the McCloud judgment. The response confirms that, subject to Parliamentary time and approval of the necessary legislation, the MoJ will run an exercise in 2022 for judges in scope, allowing them to choose whether to have accrued benefits in the 2015 pension scheme or the legacy scheme from 1 April 2015. Membership of those chosen schemes will end when the reformed judicial pension scheme comes into effect, and all judges will then join the new scheme.
The House of Commons Library has updated its briefing paper which looks at current issues regarding judges’ pensions.
MAPS has published an interim report (in advance of quarterly reporting commencing in 2021/22) on MAPS’ pensions guidance services. The figures show 18,778 people used the digital self-serve guidance option on the Pension Wise website in the third quarter of 2020/21. The interim findings also showed that 49,211 pensions guidance customers were helped by TPAS in the third quarter of 2020/21.
The House of Commons Library has published a Parliamentary Insight on what the Uber judgment means for the service’s drivers and what may happen next.
For further details on the Supreme Court’s judgment, please see our case report.
The Pensions Dashboards Programme (“PDP”) has published a blog providing an update on its identity service, which will verify that dashboard users are who they say they are, discussing its recent call for input (see 7 Days) on the identity approach. It also outlines the results of an October 2020 market engagement exercise.
The PPF has published interim guidance on its approach to and requirements in relation to the Corporate Insolvency and Governance Act 2020. At the same time, it published its Insolvency Practitioner rate card (applicable from 1 March 2021) and refreshed its standard documents for use in restructurings.
The interim guidance confirms that the PPF “is supportive of genuine attempts to restructure viable businesses to enable them to continue and meet their commitments to” DB pension schemes. However, it must be “likely that a moratorium for the company would result in the rescue of the company as a going concern” – subject to any temporary amendments applied due to the COVID-19 pandemic. In the PPF’s view, this “is a very high bar”, and if its requirements are not met, the PPF may choose to present a challenge to the court.
The interim guidance also sets out the factors that the PPF will consider when deciding its approach to voting on any restructuring plan proposal.
The suite of “standard documents for restructuring” are designed to protect the interests of the PPF and the scheme where a restructuring is proposed, by enabling the PPF to acquire cash / an equity stake. The PPF warns that “any company or group of companies proposing a restructuring should be prepared to enter into these documents”; If they are not prepared to do so, this is likely to prevent the restructuring. The documents include amongst other things a shareholders’ agreement, articles of association, and sample loan note agreement.
Ahead of the Budget on 3 March, the PLSA has published a report setting out five principles that it believes should underpin any reform of pension taxation and assessing whether certain options for reform would satisfy these principles. The report concludes that none of the main reform options, nor the current system of pension taxation, meet all the principles.
The options explored include reducing the annual or lifetime allowance, removing higher rate income tax relief, introducing a flat rate of tax relief for all savers of 25% or 30%, or taxing pension contributions at a person’s full marginal income tax rate upfront (“TEE”).
On 1 March, the Treasury Committee published a report on “Tax After Coronavirus”, which discusses potential changes to the tax system to help “reconstruct” the economy in the wake of the COVID-19 pandemic. Amongst other suggestions, it recommends “the Government should urgently reform the entire approach to pension tax relief”.
The WPC has launched an inquiry into access to pension savings, as the second part of its broader inquiry into the impact of the pension freedoms and the protection of savers (see 7 Days). The Committee will examine what options are open to people when they come to access their pensions, as well as the advice and guidance which is available. The deadline for responses is 15 April 2021.
The inquiry into the impact of the pension freedoms has been examining pension scams since July, and the WPC intend to publish a report on this “shortly”. After the focus on accessing pension savings, the inquiry will move on to the third part of the inquiry, looking at saving for later life.
The UK has agreed to the European Commission’s proposal to extend the provisional application of the Trade and Cooperation Agreement until 30 April 2021 (see 7 Days). In the UK’s response, Michael Gove noted the Government’s expectation that there would be no further extensions beyond 30 April 2021, particularly in light of the “uncertainty” that continued provisional application would create.