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

DWP guidance on state pension calculation updated

As a result of the UK leaving the EU, the rules on how the UK state pension is calculated are changing for recipients who live in the EU, EEA or Switzerland and who previously lived in Australia (before 1 March 2001), Canada or New Zealand. On 9 August 2021, the DWP published updated guidance on these rules and confirmed the changes will come into force from 1 January 2022.

DWP guidance on GMPs and effect of new state pension

On 12 August 2021, the DWP published guidance on GMPs and the effect of the new state pension, including a fact sheet which explains the effect of the new state pension for people who had been contracted-out of the additional state pension.

HMRC newsletter on Managing Pension Schemes Service

On 16 August 2021, HMRC published its latest newsletter for pension schemes. The newsletter includes guidance on how to declare as a pension scheme administrator for retirement and deferred annuity contracts, submitting Event Reports, the migration of schemes from the “Pension schemes online” service to the “Managing pension schemes” service (with a list of schemes to be migrated becoming available from 19 October 2021), and Accounting for Tax (“AFT”) returns.

ICO consults transfer of personal data outside the UK

On 11 August 2021, the ICO launched a public consultation on its draft international data transfer agreement (“IDTA”) and guidance. When organisations send personal information to a country outside the UK, they must ensure people’s data protection rights continue to be protected. An IDTA is a contract that organisations can use when transferring data to countries not covered by adequacy decisions.

The IDTA will replace the current standard contractual clauses (“SCCs”) to take into account the binding judgment of the CJEU in the case Schrems II. This required organisations to carry out further diligence when making a transfer of personal data outside of the UK to countries without an adequacy decision.

Offering a selection of proposals and options to consider, the consultation is split into three sections:

  • proposal and plans for updates to guidance on international transfers
  • transfer risk assessments
  • the IDTA.

The ICO is also asking for views on any relevant privacy rights, legal, economic or policy considerations and implications.

The ICO’s work around IDTAs, and its consultation, are a requirement under the Data Protection Act 2018. The consultation will inform the final documents the ICO will lay before Parliament, and will close on 7 October 2021.

PASA announces Benefit Statements working group

On 16 August 2021, PASA announced that a DWP-led working group has been set up “to look at options to develop an approach to a statements season”. This follows changes proposed in the DWP’s recent consultation on simpler annual benefits (see our Alert and consultation response).

PASA Chair, Kim Gubler commented: “Benefit statements are high on the industry agenda and rightly so; the range and complexity of what has historically been provided to members is not working. The Pensions Minister is keen to standardise and simplify what’s provided to members and PASA fully supports this move. The proposed changes… have far reaching consequences for pension administrators, and the formation of our Benefit Statements Working Group is in direct response to this.”

Helen Ball, Chair of the working group and partner at Sackers, commented: “Simplifying benefit statements, as has been proposed, raises multiple issues. The newly established working group will… make recommendations to the PASA Board across the key following areas:

  • the introduction of a “Statement season”
  • the legislative, regulatory or process changes required to support the delivery of these statements
  • guidance for trustees, administrators and sponsors”.

PASA guidance on transfer payments

On 11 August 2021, PASA’s GMP Equalisation Working Group published guidance aimed at finding “a pragmatic approach to equalising historical transfers”. This guidance builds on the High Court’s most recent Lloyds decision (in November 2020) that DB schemes should, in certain circumstances, top-up past unequalised transfers out. See our Alert for further detail on that judgment.

PASA’s guidance considers separately the impact of the judgment on:

  • transferring schemes which paid individual transfer values
  • receiving schemes which received individual transfer values
  • bulk transfers between schemes

and the steps those schemes might now take.

Public sector type schemes and those operating transfer club arrangements are carved out of the guidance. For future transfers out the guidance recommends schemes “seek actuarial advice and adopt transfer value factors so values are calculated in a way that eliminates any GMP inequalities in respect of the Equalisation Period” (that is, from 17 May 1990 to 5 April 1997 inclusive)”.

Please see our Alert for further detail on the guidance.

TPR blog on trustees’ influence in shift to net-zero economy

On 10 August 2021, TPR published a blog regarding the climate crisis and the impact that pension scheme trustees can have on the transition to a net-zero economy, saying that pension schemes “can and must make a difference”. In the blog, David Fairs, TPR’s Executive Director of Regulatory Policy, Analysis and Advice, said: “A landscape of resilient pension schemes that protects savers from climate risk is entirely within our reach… We want action, not just well-meaning intentions.”

Mr Fairs notes that “even where trustees feel their advisers and asset managers are doing a satisfactory job considering climate-related risks and opportunities, the trustees have a duty to monitor whether their expectations are being met” and should challenge advisers and asset managers to improve their processes where appropriate.

Mr Fairs also encourages trustees to respond to TPR’s consultation on draft guidance on governance and reporting of climate-related risks and opportunities (see 7 Days), and to sign up to the 2020 UK Stewardship Code (see 7 Days).