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

Fraud compensation levy ceiling set to increase

On 10 March 2022 the Government responded to its consultation reviewing the fraud compensation levy ceiling.

The fraud compensation levy is paid by occupational pension schemes and is used to fund the Fraud Compensation Fund (“FCF”), which makes payments to certain schemes that have lost money as a consequence of fraud. A ruling back in 2020 (see 7 Days) confirmed that occupational pension schemes that have suffered a loss as a result of an act of dishonesty could be eligible for FCF compensation.  As the FCF does not have the assets to cover the potential claims from these schemes following this ruling, the Government will make a loan to the PPF to cover the potential compensation payments (see 7 Days).  In its consultation response, the Government confirmed it will increase the fraud compensation levy ceiling to allow the PPF to set the fraud compensation levy at levels that will enable it to repay the Government loan.

The Government also published final regulations to implement these changes, increasing the levy ceiling from 30p to 65p per member for master trusts and from 75p to £1.80 for other eligible schemes from 1 April 2022.

Revaluation Order for public service schemes published

The Public Service Pensions Revaluation Order 2022 was laid before Parliament on 7 March 2022.  It sets out the revaluation required by schemes under the Public Service Pensions Act 2013 for the year to 31 March 2022. The Order comes into force on 1 April 2022.

Government responds to McCloud consultations for the firefighters’ and police pension schemes

The Government continues its work on public service pension schemes following the judgment in McCloud (see 7 Days), publishing its response to the consultation on proposed amendments to the police pension schemes, as well as its response to the consultation on proposed amendments to the firefighters’ pension schemes.  In both cases, all remaining members will move from the legacy schemes to the 2015 schemes from 1 April 2022, to ensure that all members are treated equally in respect of any pensionable service built up after 31 March 2022.  The regulations implementing the changes are due to come into force on 1 April 2022.

The responses confirm that further sets of draft regulations are “under development”, to address the second part of the remedy (ie addressing the period between 1 April 2015 to 31 March 2022).  Regulations to implement those changes will be presented in separate public consultations later this year.

PPF issues statement on Ukraine

On 7 March 2022, the PPF issued a statement to reassure its members that its investment exposure to Russia is “negligible”, amounting to less than 0.01% of the total fund value.  As such, it does not anticipate “any material financial impact” on the PPF from its investments in the region.  However, “as a responsible investor” it is working with its asset managers to dispose of its remaining Russian assets “as soon as [it is] practically able to”.

Punter Southall Governance Services Ltd v Benge & Anor (High Court, 1 February 2022)

The High Court has approved a decision by the trustees of the BST Group Pension Scheme to distribute death benefits in respect of a member to his partner, after objections were raised by the deceased member’s son.

In reaching his decision, the judge considered the meaning of “dependant”, noting that the phrase “necessaries of life” takes account of the relevant status, in terms of class and position in life, of the person concerned.  In each case, what constitutes the “necessaries of life” will therefore be fact sensitive.  The judge also considered that being dependent on someone for the “necessaries of life” is materially the same as the definition of “dependant” under the FA04.

For further detail, see our case summary.