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

Pension Schemes Bill – proposed climate change amendments

Amendments have been proposed to the Pension Schemes Bill (“the Bill”) published earlier this year (see our Alert). The proposed changes, amongst other things, include the power for regulations to “impose requirements on the trustees or managers of an occupational pension scheme of a prescribed description with a view to securing that there is effective governance of the scheme with respect to the effects of climate change”. These requirements could include reviewing the exposure of the scheme to climate change risks, determining a strategy for managing the scheme’s exposure and publishing information relating to the effects of climate change on the scheme.

The committee stage (line by line examination) of the Bill’s progress through Parliament is scheduled to begin on 24 February 2020.

Auto-enrolment earnings trigger confirmed

On 13 February 2020, Pensions Minister Guy Opperman confirmed that he intends to lay an order before Parliament following the February recess, so that for auto-enrolment in 2020/2021:

  • the earnings trigger will be maintained at £10,000 and
  • the upper limit of the qualifying earnings band will remain at £50,000.

Updated HMRC guidance on money laundering supervision

On 11 February 2020, HMRC updated its guidance on money laundering supervision for trust or company service providers. The guidance is intended to help “find out if you’re a trust or company service provider who needs to register for supervision with HMRC under the Money Laundering Regulations”.

The ‘who should register’ section was updated to reflect changes to the Money Laundering Regulations. From 10 January 2020, trust or company service providers must not trade until HMRC has confirmed the application has been successful. The guidance states that you do not need to register if you are “an individual or company offering professional trustee services to certain low-risk trusts [which includes occupational pension schemes]”.

PASA launch consultation on DB Transfers Code of Good Practice

On 11 February 2020, PASA published a consultation on its DB Transfers Code of Good Practice.

In July 2019 the PASA DB Transfers Working Group released guidance focusing on what was defined as a ‘standard’ or straightforward transfer (see 7 days). The original intention was that that guidance would be the first of a two-part release, with the second part covering ‘non standard’ transfers. However, it was subsequently agreed that the Group would produce a code of good practice to cover all DB transfers instead of a part two. This code is now being launched.

The code “sets out to create faster, well-communicated, efficient and cost-effective strategies scheme administrators and wider stakeholders can execute”. The code’s objectives are to:

  • “improve the overall member experience through faster, safer transfers”, setting out expected timescales for processing transfers
  • “improve communications and transparency in the processing of transfers” and
  • “improve efficiency for administrators”, using standard forms and templates.

The consultation closes on 30 April 2020.

PMI launch professional trustee accreditation programme

The PMI launched an accreditation programme for professional trustees on 13 February 2020. The “APTitude” programme was formed “following standards published by the Professional Trustee Standards Working Group (PTSWG) in 2019 to raise standards and provide assurance about the quality and skills of professional trustees and discourage poor practices in the industry”. The programme is open to all professional pension scheme trustees, who meet TPR’s description of a professional trustee. Applications may be made from 24 February 2020.

TPR blogs on “positive change” in 2020 and diversity

TPR published a blog on 10 February 2020: “2020 will be a year of positive change”. The blog includes discussion of:

  • the consultation on a revised DB funding code (due in March)
  • TPR’s plans to “continue to work closely with the DWP, the Pension Protection Fund (PPF) and other regulators on an authorisation and supervision framework” for “DB superfunds”
  • TPR’s launch (later this year) of a “long-term strategy to consider the future shape and needs of the pensions landscape” and
  • the implementation reports required from October 2020.

TPR released another blog on 13 February 2020 entitled “Breaking down barriers to create diverse boards of trustees”. This follows on from TPR’s response to its Future of Trusteeship and Governance consultation (see our Alert), which said that TPR will establish and lead an industry working group to find ways of supporting schemes with making improvements to trustee diversity.

The blog describes research which “points to the fact that diverse groups achieve better decisions through debate and challenge”. It then goes on to discuss unconscious bias, role models, changing diversity and inclusion and the industry working group being established. TPR encourages anyone wishing to take part in the industry group to contact it by 29 February 2020.

Consistency for pensions in Cabinet reshuffle

Ministerial appointments announced on 13 February 2020 confirmed that Guy Opperman will remain as Pensions Minister and Thérèse Coffey will continue as Secretary of State for Work and Pensions.

Consultation planned to deal with McCloud judgment

Economic Secretary, John Glen, has confirmed that preparations are being made for a “full public consultation” relating to dealing with the McCloud judgment (which held that the transitional provisions which were put in place as part of reforms to both the Judicial and Firefighters’ Pension Schemes constitute unlawful direct age discrimination) in public service pension schemes. Mr Glen stated “the Government has committed to addressing the discrimination identified in McCloud in all public service pension schemes, while ensuring all members can keep their accrued benefits. Schemes are currently discussing high-level proposals to achieve this with employer and member representatives, to inform a full public consultation”.

Atos case – index could not be changed from RPI to CPI

The High Court has ruled that Atos IT Services UK Ltd, the Principal Employer for the Atos UK 2011 Pension Scheme, could not change the index by reference to which pensions in payment are increased (indexation) from RPI to CPI (click here for our case report).

A consultation is expected to be released alongside the Budget on whether to “address the shortcomings of RPI” between 2025 and 2030.