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
- DWP consultation on “nudge” to pensions guidance
- Government response to WPC report on pension scams
- Briefing papers on public service pensions
- Occupational Pensions Stewardship Council formed
- PASA GMP conversion guidance
- PPI report on member impact of accelerated DB pension scheme closures
- Consultation outcome concerning teachers’ pension scheme regulations published
- TPR surveys and blog reflecting on its response to COVID-19
- TPR updates AE guidance
On 9 July 2021, the DWP launched a consultation on proposed regulations requiring trustees and pension scheme managers to make sure an individual has either received – or opted out of receiving – the pensions guidance available from Pension Wise, when individuals seek to access, or transfer for the purpose of accessing, the retirement flexibilities. Pension schemes will also be required to offer to book a Pension Wise appointment on the individual’s behalf.
This follows the October 2020 DWP “statement of policy intent” setting out proposed measures to encourage beneficiaries to access “appropriate pensions guidance”, with the aim of helping them make informed decisions and avoid scams (see 7 Days). This DWP consultation sits alongside the recent FCA proposals to increase the take-up of Pension Wise guidance (see 7 Days).
Minister for Pensions, Guy Opperman, said “it is vital that savers have the support they need when making decisions about their pension pots that could have serious financial consequences for them in later life… This change is vital in preventing savers from failing to take advice and increasing the take-up of the guidance that is available”.
The consultation closes on 3 September 2021.
The DWP is separately consulting on draft regulations that will, if brought into force, require trustees and managers of certain schemes to refer customers to a scams guidance appointment, provided by MAPS, if a proposed transfer is deemed to be a potential scam risk (see our Alert for further detail).
On 6 July 2021, the WPC published the Government’s response to the Committee’s report on pension scams (see 7 Days). The Government has rejected the Committee’s recommendation that the forthcoming Online Safety Bill (see 7 Days) should tackle online fraud facilitated through paid-for advertising, such as adverts for pension products on search engines. Instead, the Government plans to consult on online advertising regulation later in the year.
Stephen Timms, Chair of the WPC, said: “Ministers claim to understand the devastating impact of illegal activity online, but by constantly failing to act against paid for adverts online they remain at odds with their own enforcement agency and totally ambivalent to what the FCA warns is a major source of harm… A vague promise to consult later this year is too little too late.”
In a letter responding to the Committee’s report, also published on 6 July 2021, the FCA said that online advertising is “the major source of problems leading to very significant consumer harms”.
The FCA has also urged pension holders to “flip the context” when approached with pension offers, “by imagining the same offer in person, in an everyday, offline setting like a trip to the shops or an afternoon in the pub”. Alongside a reminder of key warning signs of scams, and a quiz, the campaign seeks to make scams “easier to spot and avoid”.
The House of Commons Library has published a briefing paper which discusses the Government’s plans to address the discrimination in the transitional arrangements for the 2015 public service pension schemes, identified in the McCloud judgement.
On 8 July 2021, the DWP announced that a number of pension schemes have formed the “Occupational Pensions Stewardship Council”, a group intended to “provide a platform for sharing best practice and research, giving support to pension schemes wanting to take part in more thoughtful investment”. The Council will support member schemes “to understand the immediate ways that stewardship facilitates both sustainable financial returns, and better short, medium and long-term outcomes for hard-working pension savers”. So far 28 pension schemes, responsible for more than £550bn of assets, have signed up.
Minister for Pensions and Financial Inclusion, Guy Opperman, said: “the role of pension schemes, trustees and asset managers over the next five to ten years will be utterly vital in the passage of this country, and the entire world, to net zero”. The Council has been set up following a recommendation made in the Treasury-led Investing with Purpose report for the creation of a Council of UK Pension Schemes to promote and facilitate high standards of pension stewardship (see 7 Days).
On 9 July 2021, PASA published its eagerly awaited guidance on GMP conversion, which aims to provide examples of how GMP conversion is being used, explains the issues faced and how they were addressed and how simplification can be achieved in many cases without “a significant impact on members”. Recognising that many schemes will wish to go down the GMP conversion route, this guidance aims to “show how they might do so in a proportionate and pragmatic way” in the absence of further guidance or legislation from the DWP or HMRC.
See our Alert for further detail.
Separately, PASA has announced the formation of a further GMP Equalisation sub-group focusing on administration to provide help, support and, where appropriate guidance, to those involved in GMP Equalisation projects.
Further PASA guidance is expected on GMP equalisation and historic transfers, anti-franking and communications. Administration Q&As will also be published as regular updates. Other events in the PASA pipeline include a “GMP equalisation week” in the autumn.
On 7 July 2021, the Pensions Policy Institute (“PPI”) published a report looking at the number and nature of individuals at risk from DB scheme closure and the impact that accelerating scheme closure might have on retirement income for members. The report found that “the variation in outcomes as a result of an individual bearing investment risk in a DC pension scheme leads to a far wider spread of outcomes” and whilst a DC pension scheme can produce higher income in retirement “this is associated with an increase in downside risk, meaning that poorer outcomes are more likely in a DC scheme than a DB scheme”.
The Department for Education (“DfE”) has published its consultation outcome regarding proposed changes to the teachers’ pension scheme regulations to amend survivor benefits (see 7 Days), and to allow phased withdrawal for independent schools. The Government intends to lay final regulations before Parliament in July 2021, with amendments coming into force on 1 August 2021.
On 9 July 2021, TPR published two surveys and a blog reflecting on how it responded to the COVID-19 pandemic, and noting that “over the past 15 months we have all been tested like never before. The immediate financial pressure on employers, as well as the logistical challenges of a country plunged into lockdown presented a significant risk to savers”.
TPR’s perceptions tracker survey 2020, showed 70% of respondents judged its response to the pandemic to be “good” or “very good”. Of the remainder, 17% rated its response as “fair”, with only 2% entering a “negative” rating.
TPR’s stakeholder perceptions survey, which was carried out last autumn, shows the vast majority praised the “decisiveness, fairness and timeliness of TPR’s COVID-19-related activity” and felt TPR “took a pragmatic and proactive approach to managing COVID-19 and effectively communicated [its] approach”.
TPR has updated its suite of guidance on AE. The changes are being made to remove out of date content and make general updates including in relation to cross-border and non-UK pension schemes post Brexit. Details of the changes can be found towards the beginning of the guides in question.