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
- EIOPA delivers PEPP regulation
- Scheme funding analysis 2020
- TPR publishes report on modelling long-term funding objectives
- TPR response on conflicts of interest, smaller schemes and scams
- US-EU discussions on enhanced Privacy Shield
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.
On 14 August 2020, EIOPA delivered draft legal instruments and technical advice to the European Commission, intended to implement the framework for the design and delivery of Pan-European Personal Pension Products (“PEPPs”) (see 7 Days). The regulatory provisions “include clear and enforceable quality criteria” to be followed by providers, and to ensure that European consumers will be “offered high-quality, safe, transparent and simple PEPPs”.
On 11 August 2020, TPR published its scheme funding analysis for DB and hybrid schemes with effective valuation dates falling from 22 September 2017 to 21 September 2018 inclusive (known as “Tranche 13” or “T13”). The report shows funding trends in the context of market conditions, as well as assumptions and scheme characteristics that impact on valuations. It also describes reported arrangements for recovery plans, employer contributions and contingent security.
By the end of January 2020, TPR had received over 1,730 valuations with an effective valuation date for Tranche 13. Over one third of those valuations reported a surplus on a technical provisions basis. In addition, the growth in assets had exceeded the growth in liabilities between Tranche 10 and 13 valuation dates for a majority of schemes.
TPR has published a report by GAD on the impact of setting the long-term funding objective (“LTO”) in different ways under the revised funding Code of Practice, and the approach that schemes might take to achieve their LTO over a suitable time period. The report sets out GAD’s “analysis on the costs, in terms of sponsor contributions, and the change in security of member benefits from a range of approaches to the LTO”. It also “briefly considers the integration of current funding approaches with the LTO”.
The report should be read alongside TPR’s consultation on the new DB funding code, which closes on 2 September (see our Alert).
On 13 August 2020, the WPC published a response from TPR to the WPC’s letter relating to the Norton Motorcycles pension schemes.
Of general interest, the response notes that TPR is currently conducting an internal review which will include consideration of how it uses data “to identify any trends or patterns with respect to conflicts of interest”. TPR is also considering how it processes and develops “information around whistleblowing reports, alongside other intelligence sources to identify trends and risks which pose a threat to savers”.
In addition, the response looks at TPR’s review of smaller schemes. Unsurprisingly, TPR does “not have the resources to review every small scheme”. To make “the best use of public money”, it therefore targets resources where it sees the greatest risk, which is why continuing to build on its “joined-up approach” with other agencies is considered so important.
In relation to pension scams, TPR is “aware of the potential extra risk of scams due to the pandemic”. Consequently, it hopes to build on the success of last year’s campaign “by providing pension savers with the knowledge and tools to avoid pension scams and getting the industry to do all they can to protect savers”.
On 10 August 2020, a joint press statement was released, announcing that the U.S. Department of Commerce and the European Commission have “initiated discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework”. This follows the recent CJEU decision in Schrems II, which held that the Privacy Shield is currently not a valid mechanism to transfer personal data from the EU to the United States (see our case summary).