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

TPR sets out expectations of trustees and sponsors in relation to debt refinancing

On 10 August 2022, TPR published a blog on debt refinancing in the current economic climate, which considers the risks of refinancing to the employer covenant and the actions trustees and sponsors should take to ensure member benefits are protected. TPR considers it critical that trustees and sponsors understand the implications of any refinancing on the pension scheme and the employer covenant, and mitigate any detriment caused, to the extent possible. The blog sets out several factors trustees and sponsors should consider (alongside any other relevant factors), including:

  • any impact on the sponsor’s free cash flow
  • security or guarantees given in favour of lenders, and the impact on the scheme in the event of an insolvency, and
  • restrictive covenants which may restrict a sponsor’s ability to agree appropriate funding plans or protections for the scheme.

TPR expects trustees to also be mindful of other debt transactions, such as a change of lenders, which “could precipitate a change in lending strategy”. The blog refers to TPR’s guidance on corporate transactions and clearance, which contains further details of TPR’s expectations.

HMT publishes consultation on public sector exit payments

On 8 August 2022, HMT published a consultation proposing, among other matters, a new assessment and approvals process for public sector exit payments over £95,000. Certain early retirement costs can be included in the value of exit payments, meaning that individuals nearing retirement age may be more likely to have their payments assessed. The proposals are intended to support the Government’s ambition to reduce the use of large exit payments in the public sector, following the revocation in March 2021 of a £95,000 cap on exit payments for public sector authorities due to “unintended consequences”. The consultation closes on 17 October 2022.

PPF encourages trustees to make contingency plans for employer insolvency

On 9 August 2022, the PPF published comments on its latest monthly estimated funding position for PPF-eligible DB schemes, which showed a decline in the overall funding position for the first time in six months. As the economic outlook “remains uncertain with the risk of an uptick in the rate of corporate insolvencies”, the PPF encourages trustees to have contingency planning for employer insolvency in place, even if their funding position is strong.

Pensions Policy Institute asks administrators and pension providers to complete a lost pensions survey

The Pensions Policy Institute (“PPI”) has published a survey to collect evidence on the direction of travel in relation to the challenge of lost pensions prior to the introduction of pensions dashboards. Open until 19 September 2022, the survey will support the future publication of a briefing note updating the PPI’s 2018 publication on lost pensions.