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
- Legislative reforms on sustainable finance adopted by Council of the EU
- Updated Employment Tribunals’ Principles for Compensating Pension Loss
- IA publishes industry-wide common language for responsible investment
- New guidance on processing special category data
- Update to TPR’s DB to DC transfers and conversions guidance
- Update to TPR’s master trust authorisation decision-making procedure
The Council of the EU has announced that it has adopted regulations aimed at “making finance greener and bringing it more in line with the objectives of the Paris agreement on climate change”.
The first regulations introduce disclosure obligations on how financial companies integrate environmental, social and governance factors in their investment decisions.
The second regulations create new types of benchmarks aimed at giving greater information on an investment portfolio’s carbon footprint: the EU climate transition benchmarks, which aim to lower the carbon footprint of a standard investment portfolio, and the EU Paris-aligned benchmarks, which have the more ambitious goal of selecting only components that contribute to attaining the 2°C reduction set out in the Paris climate agreement.
The texts will be signed in the week of 25 November, and will then be published in the Official Journal of the European Union.
The guidance for tribunals and parties on calculating compensation for pension loss has been updated (in a First Revision to the Fourth Edition which was first issued in August 2017 (see 7 days)). The update covers changes to:
- the statutory discount, tax and state pension rates
- the approach to claims for compensation for loss of state pension rights, to take account of national insurance credits
- the methodology for grossing-up over more than one tax band.
On 18 November 2019, the Investment Association published an industry-wide framework and set of definitions to categorise the most common approaches to responsible investment. The aim is to provide clarity and consistency for savers, to help savers better access and compare funds with a focus on environmental or social outcomes. Investment managers are encouraged by the IA to adopt the framework and definitions.
On 14 November 2019, the ICO announced new guidance on processing “special category” data. Special category data includes information relating to someone’s health, racial origin, religious belief, politics, sex life or sexual orientation. The new guidance is intended to help with compliance with the extra protections under the GDPR for such categories of data.
The guidance also includes a template “appropriate policy document”, a short document outlining compliance measures and retention policies for special category data, required when using certain conditions for processing that data.
TPR’s guidance on DB to DC transfers and conversions has been updated to reflect changes to the way that financial advisers are approved and recorded on the FCA’s Financial Services Register.
From 9 December 2019, the FCA is replacing its Approved Persons Regime with the Senior Managers and Certification Regime (“SM&CR”). Only senior managers (and selected other roles) will need to be approved going forwards. Other individuals, for example those carrying out customer-facing roles, will be subject to a certification regime carried out by their firm and most will not appear on the FCA register going forward.
This impacts the checks that trustees have to carry out to ensure that members transferring safeguarded benefits have received appropriate independent advice. TPR notes that trustees should continue to check the FCA register for firm details. They will then need to contact firms to confirm that the relevant individual works for that firm or check an appropriate third-party directory. TPR’s guidance also suggests the record-keeping steps trustees should take in this area.
A new directory containing data on certified individuals will be released in 2020.
TPR has updated its master trust authorisation decision-making procedure to reflect the fact that all existing master trusts have been through the authorisation process, and the procedure only applies now to new master trusts wishing to enter the market. References to oral hearings and the Determinations Panel have been removed, as the decision on whether to grant authorisation or not now lies with TPR.