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
- The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021
- The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021
- DWP consultation on CDC regulations
- DWP publishes draft policy paper on changes to bereavement benefit rules
- DWP outlines its priority outcomes
- DWP extends TPO’s term of office
- FCA publishes letter to WPC on online financial promotions
- FCA publishes Business Plan for 2021/22
- FCA workstreams update
- Treasury Committee reports regulator responses to net zero and green finance recommendations
- PPF v Hughes
The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (“the Climate Change Governance and Reporting Regulations”) were made on 13 July 2021 and will come into force on 1 October 2021. These regulations were published in draft on 8 June 2021 (see our Alert) and require trustees to meet climate change governance requirements which underpin the TCFD recommendations and to produce and publish (on a publicly available website, accessible free of charge) a report on how they have done so.
The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021
The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021 were made on 15 July 2021 and also come into force on 1 October 2021. These regulations form part of a package of regulations alongside the Climate Change Governance and Reporting Regulations (see above). They introduce new TKU requirements on the risks to, and opportunities for, occupational pension schemes relating to climate change, for trustees who are subject to the requirements in the Climate Change Governance and Reporting Regulations, as well as making amendments to the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 and to the Register of Occupational and Personal Pension Schemes Regulations 2005.
The PSA21 introduced a framework for “collective money purchase schemes”, also known as collective DC or “CDC” (see our Alert), with a regulatory regime closely resembling that put in place for master trusts (see our Alert), but much of the detail remained to be set out in regulations. The Government published example regulations (see 7 Days), but these were purely illustrative.
Today, 19 July 2021, the DWP has published a consultation seeking views on draft regulations that set out this awaited detail, including what CDC schemes must do to become authorised, to operate effectively in the market under regulatory supervision, and what happens if changes need to be made to their schemes. See our upcoming Alert for further detail.
The consultation closes on 31 August 2021.
On 15 July 2021, the DWP published a draft of a proposed remedial order concerning eligibility to two bereavement benefits: the Widowed Parent’s Allowance and its successor Bereavement Support Payment. Currently, these benefits can only be paid to those who were married or in a civil partnership with the deceased at the date of death.
Following the judgments in McLaughlin and Jackson, in which the courts held that current eligibility criteria discriminates between children on the grounds of the legal status of their parents’ relationship, this draft order proposes that eligibility should be extended to surviving cohabitees with dependent children. The draft order removes incompatibilities from legislation including the Pensions Act 2014. The draft proposes that the changes apply retrospectively from 30 August 2018 (the date of the McLaughlin judgment) and some claimants will be entitled to retrospective payments.
The DWP have also published a draft Explanatory Memorandum which sets out further details.
On 15 July 2021, the DWP published its Outcome Delivery Plan: 2021 to 2022, which outlines priority outcomes, “strategic enablers” and how the outcomes will be achieved. One of the four priority outcomes is to deliver “a reliable, high-quality welfare and pensions system which customers have confidence in”.
The DWP plans to bring forward regulations to implement CDC (see above), enable trustees “to protect members from potential scam schemes”, and ensure pension schemes “play their role in the climate agenda”. Other areas of focus include ensuring “MAPS is proactive in supporting financial resilience and developing the mid-life MOT” (see 7 Days) and continuing the delivery of the pensions dashboards.
The DWP has extended the term of Anthony Arter as TPO. In a letter to WPC Chair Stephen Timms, Minister for Pensions and Financial Inclusion Guy Opperman stated that Mr Arter’s term will be extended for a period of 12 months from 1 August 2021.
In a letter to the WPC dated 11 June 2021 (published on 13 July), FCA Chief Executive Nikhil Rathi noted that the FCA believes the “best way to protect consumers from illegal online scams is for financial harm to be included… in the Government’s proposed Online Safety Bill” and that these provisions should include “online advertising (responsible for the majority of fraudulent activity) as well as user-generated content.”
However, the Government has recently rejected the WPC’s recommendation that the forthcoming Online Safety Bill should tackle online fraud facilitated through paid-for advertising, and instead plans to consult on online advertising regulation later in the year (see 7 Days).
Mr Rathi also reported on the latest figures from the ScamSmart pension fraud campaign, announcing that the campaign has reached four out of five pension savers aged between 45 and 64, the group considered most at risk.
On 15 July 2021, the FCA published its Business Plan 2021/22, committing to be “a more innovative, adaptive and assertive regulator”. Key areas of focus include improving standards of pension advice, strengthening rules on financial promotions to protect consumers in relation to investments, and a consumer campaign on scams and high-risk investments.
On 16 July 2021, the FCA published an update on a number of workstreams which have been delayed or postponed due to the COVID-19 pandemic. The FCA has decided not to continue with its plans to look at retirement income advice, allowing it to focus instead on its DB pension transfers work (see our blog post) and the issues raised in the 2020 consumer investments Call for Input (see 7 Days).
On 15 July 2021, the House of Commons Treasury Committee published its First Special Report of Session 2021-22, which contains responses from the FCA, the Bank of England and HMT to its report on net zero and the future of green finance. The Committee published the report in April 2021 making a series of recommendations for how the Government could achieve net zero by 2050 (see 7 Days). The responses include answers to questions on climate change, issues in relation to the Long Term Asset Fund (see 7 Days), DC default funds, and small DB schemes.
The Court of Appeal has found in favour of the PPF’s approach for increasing payments to PPF and FAS members following the 2018 CJEU judgment in the Hampshire case. The PPF is entitled to use a “value test” for calculating compensation on a one-off basis, as long as this corresponds to at least 50% of a member’s pre-insolvency entitlement.
However, the Court also confirmed the High Court’s decision that the PPF compensation cap, as set in legislation, constitutes unlawful age discrimination and must be disapplied. The period of time over which the cap can be disapplied is not yet clear, and the Secretary of State for Work and Pensions has asked for more time to address the Court on this issue.
The judgment may yet be appealed, so the PPF has said that for now it will continue to pay members their current level of benefits and will provide more information on the implementation of the judgment as soon as possible.
See our upcoming case report for further detail.