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
- EIOPA supervisory statement on registering or authorising IORPs
- European Commission publishes revised standard contractual clauses for consultation
- Fraud Compensation Fund eligibility criteria is clarified
- FRC encourages use of TCFD to improve climate-related reporting
- HMRC updates guidance on the CJRS
- PASA launches Cybercrime Guidance for Pensions Administrators
- PMI launches new competency framework
- TPR guidance on protecting schemes from sponsoring employer distress
- TPR urges pensions industry to pledge to combat pension scams
- Roadmap published on implementing TCFD’s recommendations
- Mr S (PO-22018) (member not notified of opportunity to transfer)
On 12 November 2020, EIOPA published a supervisory statement on the sound practices within the registration or authorisation process of IORPs, including the assessment of suitability for cross-border activities. EIOPA’s aim is to ensure that IORPs operating cross-border do so under prudent conditions, regardless of the different authorisation or registration regimes, following IORP II.
This is intended to foster “a level-playing field across the EU conducive to an internal market for IORPs” as well as to ensure adequate protection of members and beneficiaries.
Following the ECJ’s decision in Schrems II, which invalidated the EU-US Privacy Shield and introduced additional considerations for the use of Standard Contractual Clauses (“SCCs”) (see 7 Days), the European Commission has published a draft implementing decision on SCCs for the transfer of personal data to third countries (ie countries outside the EU and the EEA). It is seeking feedback before 10 December 2020.
The EDPS has also adopted recommendations on supplementary measures in the wake of the case, for public consultation.
The ICO has issued a statement to the effect that it is considering the recommendations published by the EDPS, and the European Commission’s new draft SCCs. It reiterates the advice that organisations should take stock of the international transfers they make, and update their practices as guidance and advice become available.
Members of certain types of scam pension schemes are eligible for Fraud Compensation Fund (“FCF”) compensation, following a ruling on 6 November 2020 (PPF v Dalriada Trustees) in which the High Court clarified how the legislation governing the FCF should be interpreted.
The FCF is open to claims by occupational pension schemes that have suffered a loss as a result of an act of dishonesty. A number of claims had been made to the FCF to compensate members of schemes that were themselves part of a scam, but it had not been clear whether these schemes were eligible. The PPF therefore asked the Court to clarify how to interpret the legislation, using a test case which broadly represented other schemes.
The High Court confirmed that these types of claims are eligible for FCF compensation, and clarified the core principles that apply. The PPF will now process the applications which were waiting for the Court’s decision.
The FRC has issued a statement on non-financial reporting frameworks. In order to improve the quantity and quality of climate-related, ESG reporting, it is encouraging UK public interest entities to voluntarily report against the TCFD 11 recommended disclosures, using the Sustainability Accounting Standards Board (“SASB”) metrics. The FRC confirms that it will consider how best to help companies to achieve reporting under TCFD and SASB before global standards on non-financial reporting are introduced.
Following the announcement that the Coronavirus Job Retention Scheme (“CJRS” or “Furlough” scheme) would be extended until 31 March 2021 (see 7 Days), HMRC’s suite of guidance has been updated with details of how to claim for periods after 1 November 2020, and reminders that 30 November is the last day employers can submit or change claims for periods ending on or before 31 October 2020.
On 9 November 2020, PASA launched their new Cybercrime Guidance for Pension Administrators. This aims to help administrators take relevant steps against possible cyberattacks, to enable them to test their vulnerability and resilience, and to be prepared to function under any circumstances so they can continue to pay pensions uninterrupted.
The guidance outlines four key areas covering different elements of cybercrime: meeting legal and regulatory standards; understanding their organisation’s vulnerability to cybercrime; ensuring resilience; and finally, in case of an attack, remaining able to fulfil critical functions.
On 11 November 2020, the PMI launched a new competency framework setting out the functional and technical competencies needed to be effective in the pensions industry. Pension professionals and trustees will be able to use the framework to identify their strengths and areas for development and help them choose which qualifications and learning interventions would best help them.
The competences are grouped into seven different functional areas: the role of the pensions profession; strategy and policy development; leadership and management; operational management; quality and client management; compliance, ethics and ESG; and trusteeship.
On 12 November 2020, TPR published guidance urging DB trustees to prepare now for the possibility their sponsoring employer faces difficulties (see our Alert). It highlights issues arising from corporate transactions and how trustees should engage in these.
The guidance makes clear that trustees should ensure they have access to relevant and up-to-date employer business and financial information. It highlights potential signs of corporate distress, outlines TPR’s expectations on trustee risk management and sets out what can be done to protect schemes.
The guidance also includes illustrative examples showing how a scheme’s position can be worsened by corporate activity or sudden changes in fortunes, and TPR’s expectations of trustees in such circumstances.
In addition, TPR has published a short accompanying blogpost by its Director of Supervision, telling DB trustees how they can prepare for the “bumpy” economic road ahead and what to expect from TPR.
TPR, supported by the Pension Scams Industry Group (“PSIG”), has launched a new campaign urging the pensions industry to publicly pledge to combat pension scams. A dedicated website is available where trustees, advisers and providers can sign up to carry out the six pledge steps, being to:
- regularly warn members about pension scams
- encourage members asking for cash drawdown to get impartial guidance from TPAS
- get to know the warning signs of a scam and best practice for transfers by completing the scams module in the Trustee Toolkit and encouraging all relevant staff or trustees to do so; study and use the resources on the ScamSmart website, TPR’s scams information and the PSIG code; consider becoming a member of the Pension Scams Industry Forum
- take appropriate due diligence measures by carrying out checks on pension transfers and documenting pension transfer procedures
- clearly warn members if they insist on high-risk transfers being paid
- report concerns about a scam to the authorities and communicate these to the member.
TPR has also launched an online interactive training module outlining the stringent processes it expects all trustees and providers to follow to keep savers safe.
On 9 November 2020, the joint Government-Regulator TCFD Taskforce published its interim report with a roadmap detailing the UK’s approach to implementing the recommendations of the TCFD. The Government is aiming to introduce fully mandatory climate-related financial disclosure requirements by 2025, with significant mandatory requirements in place by 2023.
The upcoming rules and regulations will capture a significant portion of the economy, including FCA-regulated pension schemes and occupational pension schemes, listed commercial companies, UK-registered large private companies, banks, building societies, insurance companies, UK-authorised asset managers and life insurers.
The report covers the reasons for mandatory TCFD aligned disclosures, the path towards mandatory TCFD-aligned disclosures, key considerations in developing the roadmap and next steps.
TPO has found that there had been no maladministration where a member missed an opportunity to transfer as a result of failing to forward his post and / or to provide the scheme with his new address.
For more detail, please see our case report.