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
- Coronavirus furlough scheme extended
- FCA statement on post and paper documents
- Further corporate guidance – filings, meetings, wrongful trading and interim reports
- New and updated CJRS guidance from HMRC
- PLSA launches industry group on ESG duties
- Updated TPR DC Coronavirus guidance
- TPR blog on DB funding code
- Ove Arup v Trustees of the Arup UK Pension Scheme (High Court, 5 May 2020)
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 12 May 2020, the Chancellor announced that the Coronavirus Job Retention Scheme (“CJRS”), relating to furloughed employees, will continue until the end of October. Furloughed workers will continue to receive 80% of their current salary (up to a maximum of £2,500 a month). However, changes to the CJRS are forthcoming: “new flexibility will be introduced from August”, allowing furloughed workers to “return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff”. More specific details and information around implementation will be made available “by the end of this month”.
On 13 May 2020, the FCA published a statement on how firms should handle post and paper documents. While the FCA continues “to expect firms to comply with the requirements for post and paper-based processes (both incoming and outgoing)”, it also understands that “in the current circumstances some firms may not be able to comply fully with them”. Where this is the case, the FCA expects firms to notify it “as soon as possible”. The FCA says that it will “show flexibility”, but expects firms to send communications “in a timely manner”.
On 14 May 2020, the Government announced extensions to flexibilities given to companies owing to Coronavirus, subject to successful passage of the upcoming Corporate Insolvency and Governance Bill:
- temporary suspension of wrongful trading liability will now continue until 30 June 2020
- temporary measures to give companies and other bodies flexibility around Annual General Meetings (“AGMs”) and other meetings (see 7 Days) will be made retrospective to 26 March.
Separately, also on 14 May, the BEIS and FRC published a joint Q&A document with additional information on company filings and AGMs during Coronavirus, including on the above Government flexibilities. The FRC also updated its guidance for companies on corporate governance and reporting, including further information on interim reports.
On 14 May 2020, HMRC published additional guidance on the CJRS for employers, including in relation to checking which employees can be put on furlough, and examples to help in working out 80% of employees’ wages which contains a section on how to calculate pension contributions. Minor updates to its “Claim for wages through the CJRS” guidance include a requirement that records in relation to claims must be kept for six years.
On 13 May 2020, the PLSA announced the launch of an industry group to “help produce guidance which will support schemes in getting to grips with their new 2020 Environment, Social and Governance (ESG) and stewardship reporting deadlines and duties” (for example, the requirements to publish an “implementation statement” and additional information in schemes’ SIPs – see our 2020 ESG guide). The PLSA initiative “will help schemes get both clear and consistent information from asset managers on their voting behaviour, as well as provide guidance on communicating how they have implemented their responsible investment and stewardship approaches”.
The group aims to produce two documents “in time for summer trustee meetings”: first, “a voting behaviour template and ‘pack’ for asset managers to fill out so that trustees can better compare and contrast engagement and voting behaviour, and to make it easier for trustees to produce their own disclosures”, and secondly, “practical, step-by-step guidance for schemes to achieving good practice on their implementation statements and responsible investment communications”.
On 13 May 2020, TPR updated its DC scheme management and investment: COVID-19 guidance for trustees. The main change was to introduce a new section on member transfers, which clarifies that TPR sees DC transfers as core financial transactions, and therefore expects DC schemes to prioritise them. TPR states that it is “very important to process transfers within a reasonable timeframe”. It also includes a section on scam threats, highlighting that schemes should undertake due diligence on proposed transfers. This guidance applies to DC benefits in hybrid schemes, but it notes that those schemes will need to consider how “members with both DB and DC benefits will be affected if a temporary transfer suspension is applied to the DB benefits”.
On 18 May 2020, TPR released a blog commenting on the first stage of its consultation on the new DB funding code (see our Alert). The blog suggests that TPR will continue with the consultation, despite calls “to rethink or abandon” it based on arguments that it “was written in different, more benign, economic conditions and it is now out of place”. David Fairs, author of the blog, states that he “strongly” disagrees with these arguments and, in fact, “the issues the consultation raises are even more important and relevant in the light of COVID-19”.
TPR therefore believes “the principles under consultation still stand”. However, when it consults on where Fast Track guidelines should be set “later next year, it will be essential to have regard to prevailing market conditions and where the majority of the landscape sit at that time”. The blog acknowledges that TPR will revisit the long-term objective, where the consultation was “more specific” on “what the low dependency funding basis (Gilts + 0.25-0.5%) and timing point for reaching that target (duration 12 to 14 years or equivalent measure) might be”. TPR “will review these parameters in light of the change in market conditions”, informed by “further modelling based on a range of economic scenarios”. The blog notes that TPR will continue to review the timing of the consultation (the deadline for responses to which has already been delayed to 2 September 2020 due to Coronavirus), and consider whether a further extension is required.
The High Court has ruled on the construction of a provision dealing with increases to pensions in payment. It was held that the trustees of the Arup UK Pension Scheme did not have the power to switch from using RPI to CPI for these purposes.
For further detail, see our case report.