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
- Coronavirus – Sackers response
- Regulations on PPF’s moratorium and restructuring plan rights
- Summer Economic Update – Chancellor announces Plan for Jobs
- Companies House updates online document service
- DWP guidance on pensions for UK nationals in the EEA or Switzerland
- DWP article on pensions and greenhouse gas emissions
- FCA guidance for firms on end of Brexit transition period
- FCA to launch enhanced financial services register
- FRC principles for operational separation of audit practices
- PPF – levy payment extensions and electronic invoices
At Sackers we are committed to ensuring that the Coronavirus outbreak causes minimal disruption for our clients, and have taken several steps to ensure it is ‘business as usual’. For details of these steps, as well as key points for trustees and employers to consider in light of the outbreak (which we will continue to update), please see the dedicated section of our website, or talk to your usual Sackers contact.
The Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020 came into force on 7 July 2020. The regulations have been made under powers provided by the Corporate Insolvency and Governance Act 2020 and relate to the new, free-standing moratorium and restructuring plan provisions introduced in that act, for companies in financial difficulties. The regulations provide, in certain circumstances, for the PPF to:
- take over the exercise of the creditors’ rights of the pension scheme trustees in relation to a moratorium
- have the same creditor rights as the trustees in respect of a proposal for a restructuring plan
- exercise, to the exclusion of the trustees, certain voting rights in relation to a proposal for a restructuring plan.
The PPF is required to consult with the trustees before exercising any rights in their place.
The PPF published guidance on 9 July 2020 on how to submit information to them regarding moratoriums and restructuring plans under the new provisions.
For further details, please see our Alert.
In his 8 July 2020 “Summer Statement”, the Chancellor announced a “Plan for Jobs” intended to “spur the UK’s recovery from the Coronavirus outbreak”. Relevant to pensions is the “Kickstart Scheme”: a scheme funding six-month work placements aimed at those aged 16-24 who are on Universal Credit and deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer NICs and employer minimum AE contributions.
Companies House has updated its guidance on its temporary online service allowing certain forms to be uploaded and submitted digitally, introduced as an emergency response to COVID-19. The service will now allow users to upload more form types, including for Scottish limited and qualifying partnerships, and articles and resolutions in relation to changes of constitution.
On 13 July 2020, the DWP updated its guidance on benefits and pensions for UK nationals in the EEA or Switzerland from 1 February 2020 (the first day of the UK having left the EU). The update relates to UK nationals who move to an EEA state or Switzerland from 1 January 2021 (after the end of the transition period).
The guidance notes that “the Government is seeking to maintain arrangements with the EU in some areas however the rules depend on the outcome of negotiations and may change”. This includes:
- counting future social security contributions in the EEA and Switzerland towards meeting UK State Pension qualifying conditions
- continued uprating of the UK State Pension in the EEA and Switzerland.
The guidance reassures pensioners that “regardless of the outcome of negotiations” they will continue to be able to claim or receive UK State Pension in the EEA or Switzerland, as long as they meet the qualifying conditions.
On 7 July 2020, the DWP published an article by Guy Opperman (Minister for Pensions and Financial Inclusion) on how pension schemes can be “the spring board to real change to a Net Zero Economy” in relation to greenhouse gas emissions. It suggests the issue has the potential to be the “greatest commercial opportunity of our time” and that “pension funds can be at the forefront of seizing these sustainable opportunities … through financing the green tech and energy revolution”.
The article runs through some of the steps taken towards the Government’s net zero targets. These include new investment and disclosure requirements for pension schemes (see our ESG briefing), and amendments to the Pension Schemes Bill (see our Alert) currently progressing through Parliament which, as they stand, allow schemes “to be required to take into account the Government’s net zero targets, as well as the Paris Agreement goals of limiting the rise of average global temperatures”. Mr Opperman does not believe “that government should force pension schemes to align immediately to the well below 2°C Paris Agreement goal”, as this would “prevent their constructive engagement with the firms in which they invest”.
On 7 July 2020, the FCA updated its guidance for UK firms on how the end of the Brexit transition period (on 31 December 2020) may impact their businesses and customers. The update includes changes to the section on outsourcing. The FCA expects firms to “have a clear understanding” of their dependencies on outsourcing or third-party service providers so they can “assess whether they will be able to continue providing their services after the transition period”. The guidance provides questions to help firms with doing this assessment.
The FCA has announced that it will be replacing its existing financial services register with an enhanced register from 27 July 2020 (the existing register will cease to be available from 6pm on 24 July). The enhanced register includes “improvements… in response to user feedback”, with changes aimed at making it easier to find and understand information.
Any links (for example, in member communications and booklets) to the current register will need to be updated, other than those to the homepage.
The announcement also provides an update on the publication of the directory of certified and assessed persons (following the replacement of the FCA’s Approved Persons Regime with the Senior Managers and Certification Regime) (see 7 Days). The FCA now intends to publish this “later this year”.
On 6 July 2020, the FRC announced its principles for operational separation of the audit practices of the “Big Four” firms. This follows a recommendation by the CMA that there should be an operational split between the Big Four’s audit and non-audit businesses, with separate management and accounts, due to there being “serious competition problems” in the statutory audit market (see 7 Days). The objectives are “to ensure that audit practices are focused above all on delivery of high-quality audits in the public interest, and do not rely on persistent cross subsidy from the rest of the firm”.
The FRC is now asking the Big Four firms to agree operational separation on this basis (submitting their plans to the FRC by 23 October 2020), and to provide a timetable to complete implementation by 30 June 2024 at the latest. The FRC will publish annual assessments going forwards of whether firms are delivering on the objectives and outcomes.
The first set of guidance announces that, to help schemes or sponsoring employers struggling due to the economic impact of COVID-19, the PPF is putting in place an option which gives “the possibility of up to 90 days to pay the levy without incurring an interest charge”. Companies wishing to take advantage of this will need to complete the online COVID-19 notification form. They will need to explain how COVID-19 has negatively impacted their scheme or business and that, as a result, they will have difficulty paying their levy within the usual 28 days. If the PPF is satisfied with the application, it will confirm the extension. If all payments are made within that period, no interest will be charged. An application can’t be made until the invoice has been received.
The second document explains that the PPF has decided to offer levy payers the option to choose to receive their invoice electronically, starting with the 2020/21 invoices issuing this autumn, and gives instructions on how to take advantage of this.