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

Stronger nudge to pensions guidance – final regulations, Government response to consultation and TPR blog published

On 17 January 2022, DWP released their response to the “Stronger nudge to pensions guidance” consultation, along with final regulations.

The regulations are due to come into force on 1 June 2022, to align with similar changes being introduced by the FCA in relation to contract-based schemes.  Under the regulations, trustees and managers of occupational pension schemes will need to carry out various steps when they receive an application from a member to transfer any rights to “flexible benefits” (broadly, DC), or to start receiving flexible benefits provided by the scheme.  These steps include:

  • referring the member to pensions guidance and explaining its nature and purpose
  • facilitating a guidance appointment for the beneficiary, including offering to book the appointment and, where that offer is accepted, taking reasonable steps to do so.

There are also exemptions from needing to give the nudge – including any transfers in respect of members under age 50 or if the individual has had certain financial advice/guidance in the last 12 months.

For more detail see our Alert.

TPR published a blog on 13 January 2022 in support of the upcoming changes, commenting that guidance and pensions should go to together “like fish and chips”.  The blog also confirms that TPR is aiming to produce its own guidance before the regulations come into force to help trustees and administrators prepare for the changes.

DWP guidance on the charge cap updated to reflect the upcoming ban on flat fees for small pots

Relevant DWP guidance was updated on 10 January 2022.  The updates reflect the upcoming ban on charging flat fees on pots in default arrangements of an occupational pension scheme where the fee would reduce the value of the pot to less than £100 (see 7 Days).

FSCS to increase management expenses budget following more complex pension transfer claims

The FSCS has confirmed that will increase its management expenses budget for 2022/23 by £5 million (taking that budget to £95.5 million), with rising costs due to an increase of more complex claims, particularly from individuals who were given poor advice in relation to pension transfers.

HMRC publishes pension scheme newsletter 136

HMRC published its latest pension schemes newsletter, which contains articles on various topics, including:

  • a useful summary of the proposed changes to normal minimum pension age (NMPA)
  • information on migrating pension schemes to the Managing Pension Schemes service.

ICAEW publishes guide to help auditors with DB pensions

The ICAEW has published a guide to assist auditors when they are auditing pension figures of a business. As well as exploring good practice in the requests that auditors should be making, it also includes an explanation of the roles and relationships of the various parties involved in a pension scheme, which is a useful summary for anyone new to DB pensions.

PDP publishes blog: “Supporting a market for pensions dashboard providers”

On 11 January 2022, the PDP published a blog looking at the dashboard providers market and how the programme will work with a range of potential dashboard providers during its initial testing phase.  The PDP notes that a dashboard provider market will not “spring up overnight” but that a wide choice of providers would create benefits for both consumers and the organisations providing the dashboard.

Mr S (PO-11134): scheme to reinstate member after incorrect transfer out

TPO has directed the Ministry of Defence (“MoD”) to reinstate Mr S as a member of the Armed Forces Pension Scheme (“AFPS”).  TPO found that Mr S did not have a statutory right to transfer, which MoD would have identified had it undertaken adequate checks.

Since, on the facts of the case, he had no statutory right to transfer and as the AFPS did not have the facility under its rules to make a discretionary transfer payment upon Mr S’s request, the payment of the transfer value was void.

MoD was directed to pay £2,000 for the severe distress and inconvenience caused to Mr S.

For further detail, see our case summary.