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
- Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2020
- European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020
- Public sector exit payment regulations
- DWP response on simpler annual benefit statements
- DWP guidance on benefits and pensions for UK nationals in the EEA or Switzerland
- Closure of EU-residents’ UK bank accounts post-Brexit
- Guidance: Using personal data after the transition period
- Job Support Scheme extended
- PDP launches Usability Working Group
- PLSA publishes DC decumulation recommendations
- PLSA publishes report on climate-aware investment
- TPR updates guidance on gated funds
- TPR publishes discussion document on 15-year corporate strategy
The draft Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2020 were laid on 14 October 2020. The regulations amend legislation in relation to data protection in order to ensure that the legal framework for data protection within the UK continues to function “correctly” after the transition period.
Amongst other things, the draft regulations:
- change certain references in existing regulations from “exit day” to “IP Completion Day” (31 December 2020), to ensure that the amended provisions come into effect after the end of the transition period
- reflect the ECJ’s ruling (in Schrems II) that the Privacy Shield is invalid, an updated adequacy decision in respect of Japan, and introduce further international transfer provisions for law enforcement data
- enable binding corporate rules that pre-date the GDPR and which were authorised by a supervisory authority other than the ICO, to continue to be relied on in specific circumstances.
The European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 were laid on 15 October 2020, and come into force on IP Completion Day.
The regulations extend the power to depart from retained EU case law (but not retained domestic case law relating to retained EU case law) after IP Completion Day to specified courts, including the Court of Appeal. The European Union (Withdrawal) Act 2018 had granted this power only to the Supreme Court and High Court of Justiciary in Scotland.
The regulations also set the test to be applied by these courts in exercising the power to depart from retained EU case law, but do not “amend the existing operation of the doctrine of precedent between decisions of UK courts in any way.”
The Government argues that, “without the ability to depart from retained EU case law, there is a risk that retained EU law remains tied to an interpretation from the [CJEU] that is arguably no longer appropriate in the UK”. Extending certain courts’ abilities to depart from EU case law aims to “help mitigate the operational impacts on the UK Supreme Court and High Court of Justiciary in Scotland which would arise if the power were reserved solely to those courts”.
On 14 October 2020, The Restriction of Public Sector Exit Payments Regulations 2020 were made. These regulations restrict a body listed in the Schedule to them from making payments of a prescribed description and amount to an employee or office holder in consequence of leaving employment or office (except in specified circumstances). The cap is currently set at £95,000, and comes into force on 4 November 2020.
Guidance and Directions to accompany the regulations, setting out detail including on the use of discretionary waivers and exits agreed before the cap is introduced, are awaited.
On the same date, MHCLG published draft regulations to introduce an exit payment cap and wider exit payment reform to the LGPS. A consultation on reforming local government exit pay (see 7 Days) closes on 9 November 2020.
On 16 October 2020, the House of Commons Library published a briefing paper examining the exit payment caps, including how the cap could impact lower-income workers and the circumstances in which the cap can be relaxed.
The response notes that voluntary adoption of the PLSA’s template (see 7 Days) has not been as high as hoped. As a result, the Government now plans to consult “later this year” on a mandatory approach to simpler statement templates for DC schemes used for auto-enrolment, “taking the two-page statement template… included in our consultation document as the starting point in considering the length, content and design”. It will work with industry on the detailed design of the template.
In terms of costs and charges, the Government’s proposal is to include a line in the simpler annual statement template with a clear signpost to the more detailed assessment of this information which schemes are already required to provide elsewhere.
Following the implementation of measures for these schemes, the Government will then evaluate the impact to inform a consultation on how a similar approach for all remaining schemes could be delivered.
The consultation also invited views on whether the use of high-visibility coloured envelopes (as successfully used in Sweden) would encourage people to open their pension statements. The responses did not result in a consensus of views, and flagged risks, so the Government does not propose taking this idea forward at this time.
It still believes that a “statement season” might support engagement through helping to generate a national conversation around pension saving, and acknowledges that the Government would hold joint responsibility with the pensions industry to prompt engagement with this.
On 19 October 2020, the DWP’s guidance explaining the rights of UK nationals in the European Economic Area (“EEA”) or Switzerland to benefits and pensions from 1 February 2020 was updated.
It now includes evidence members may need to provide to prove that they were living in the EEA or Switzerland if they make a new claim for benefits or pensions, or report certain changes of circumstances, on or after 1 January 2021.
On 14 October 2020, the House of Commons Treasury Committee published correspondence from Nikhil Rathi, FCA Chief Executive. The letter responds to the Committee in relation to reports that customers of UK banks living in Europe have been informed that their current accounts will be closed after the end of the Brexit transition period.
The FCA’s response covers points relating to notice periods, treating customers fairly, and how the FCA is engaging with banks.
Schemes should be aware of this potential issue, and consider whether, and if so how, to communicate about it with potentially affected members.
On 16 October 2020, the Government and ICO issued guidance on using personal data in your business or other organisation after the transition period. The guidance covers the actions that will need to be taken regarding data protection and data flows with the EU / EEA and third countries from 1 January 2021. It includes notes on adequacy decisions and Standard Contractual Clauses, the ongoing application of GDPR, and the implication of the Schrems II decision.
The Chancellor has announced an extension to the Job Support Scheme (see 7 Days) (“JSS”), which runs from 1 November 2020 for six months. The extension aims to help employers required to close their premises owing to COVID-19 restrictions with the direct result that employees are unable to work (for a minimum period of seven consecutive days). The Government will pay two thirds of eligible employees’ normal pay (up to £2,100 per month). An employer must still cover employer NICs and auto enrolment pension contributions.
Further HMRC guidance and a Treasury direction are awaited in respect of both elements of the JSS.
On 12 October 2020, the Pensions Dashboard Programme launched a “Usability Working Group”, the key purpose of which is to ensure user input in the development of the pensions dashboards. The Group will gather and share key insights and best practice, and support the creation of “helpful guidelines to dashboard providers to provide simple to use and engaging pensions dashboards that meet user needs”.
On 13 October 2020, the PLSA issued a report, DC Decumulation: Evolving the Pension Freedoms – Final Recommendations, calling for the establishment of “a new regulatory framework to help savers with the complex decisions they face when choosing how to access their pension at retirement”.
This follows the PLSA’s call for evidence on DC decumulation in July (see 7 Days).
On 14 October 2020, the PLSA published a climate investment report, identifying some key recommendations to overcome some of the barriers “that prevent pension funds from fully embracing climate-aware investment”.
On 15 October 2020, TPR published an updated version of its DC scheme management and investment: COVID-19 guidance for trustees.
In relation to the temporary closure (or “gating”) of funds, including property funds, TPR now provides further detail on when redirection of a member’s contributions might result in the creation of a default arrangement.
If this issue affects your scheme, please speak to your usual Sackers’ contact for further information as this is a complex area.
On 16 October 2020, TPR published a discussion paper on its “15-year corporate strategy”, setting out its “commitment to savers and the five strategic priorities” that it has identified as its potential future focus. It outlines “a shift in focus, over time”, from DB to DC saving, and also looks to build on “TPR’s transformation to be a clear, quick and tough regulator”.
Meetings with key stakeholders are planned to seek feedback, and comments can be submitted until 16 December 2020. The final strategy will be published in the new year when TPR “will work closely with the industry to deliver on its priorities”. The strategic priorities will form a core part of TPR’s annual three-year corporate planning going forward.