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

Consultation on Teachers’ pension scheme launched

On 15 May 2019, the Department for Education launched a consultation in relation to proposed changes to the Teachers’ Pension Scheme.

The consultation concerns proposals stemming from the Walker and Brewster cases, which aim to provide civil partners and same-sex spouses with the same survivor pension rights as widows, remove nomination form requirements for unmarried partner benefits, and make other minor amendments.

The consultation closes on 25 June 2019.

DWP publishes tailored review of TPR

On 16 May 2019, the DWP published its “tailored review” of TPR. Tailored reviews are government reviews of public bodies, which aim to ensure public bodies remain fit for purpose, well governed and properly accountable for what they do.

The review found that TPR is “a well-run organisation that effectively carries out its statutory objectives”, “particularly effective” in its implementation of automatic enrolment, and making progress in improving the standards of governance and administration in public sector pension schemes. The review also found that TPR is “making the changes it needs to become a modern regulator, both supporting the occupational pensions industry to improve standards and using their powers to enforce them”.

The paper sets out a number of recommendations. Suggested improvements include “augment[ing] the work of its Brexit Working Group to consider what guidance and support it could offer its regulated entities at this challenging and uncertain time”, improving information sharing with other organisations, and considering the benefits of extending TPR’s powers.

FOS annual review reveals increase in pension complaints

The Financial Ombudsman Service (“FOS”) released its annual review for the last financial year on 15 May 2019.

The review shows that overall, complaints about pensions had increased again, up by 42% from 2017/18, with the majority of new complaints relating to SIPPs.

HMRC publishes Countdown Bulletin issue 45

On 16 May 2019, HMRC published issue 45 of its “Countdown Bulletin”, which provides information for schemes following the ending of DB contracting-out.

The Bulletin notes that “In response to concerns raised across the Pensions Industry”, HMRC is extending its “Phase 7 Automation and Scheme Financial Reconciliation”, until November 2019. The Bulletin explains what is happening in the extended period, the new relevant dates, what this means for scheme administrators, and how this impacts the previous engagement in the Scheme Financial Reconciliation process.

TPR publishes corporate plan 2019-22

TPR published its corporate plan for 2019-22 on 16 May 2019. The plan defines the key outcomes that TPR aims to achieve through its work, and how it will evaluate those outcomes to demonstrate the effectiveness of its role.

The accompanying press release sets out examples of how “as part of TPR’s more proactive and targeted approach” hundreds more schemes will be contacted in the coming year. Schemes can expect to receive “communications clarifying duties and TPR’s expectations”. According to TPR, 20 larger schemes are currently being supervised on a one-to-one basis, and this approach is due to be rolled out to “many more”. Communications are also being sent to more than a thousand schemes to monitor how savers are being treated when it comes to matters such as dividend payments to shareholders, length of recovery plans and efficient record-keeping. TPR states that “action will be taken where standards are not met”.

Following the launch of its joint strategy with the FCA on tackling key risks facing the sector, TPR and the FCA will launch a review of the consumer pensions journey, exploring how disclosures and information from schemes and providers combine with guidance and advice services to help pension savers make well-informed decisions.

TPR will also continue to work with the FCA and MAPS on DB to DC transfers “to ensure that they work effectively for those who want to transfer, but enable savers to understand the risks involved and the options available to them”.

TPR compliance and enforcement bulletin

TPR’s latest compliance and enforcement bulletin was published on 16 May 2019.

As well as noting a 15% rise in the use of its powers in relation to automatic enrolment (from the previous quarter), the report records a number of “firsts” in uses of the powers it has generally.

The bulletin also states that, in relation to scheme funding, TPR’s supervision team succeeded in encouraging several employers to increase their deficit repair contributions (“DRCs”) and decrease the length of their recovery plans, giving a sample case study. TPR notes that “this demonstrates that ‘clearer, quicker, tougher’ is a real reflection of the way we are holding to account those who fail to do the right thing by their scheme members. It also shows that we are often able to secure good outcomes without the formal use of our powers”.

TPR to carry out short-notice auto enrolment compliance checks

TPR issued a press release on 15 May 2019, warning employers that it has started to carry out mandatory short-notice inspections, targeting those who flout their automatic enrolment duties. Non-compliance can result in fines or court action.

TPR is “using data to pinpoint specific employers” who are suspected of breaking the law in this respect.

TPR: master trust authorisation, and “what lies ahead”

On 14 May 2019, TPR issued a press release, as the extended period for applications for master trusts authorisation closed. 38 applications were made, and the process of authorisation is expected to complete “later this year”.

On the same day, TPR published a blog by Kim Brown, TPR’s Head of Master Trust Authorisation and Supervision on “what lies ahead for master trusts”, setting out TPR’s expectations of authorised schemes. Those schemes granted authorisation should expect to receive letters providing more information about the supervision requirements. TPR will address supervision proactively, following its new approach to working more closely with schemes, using a risk-based approach.

WPC publishes correspondence on contingent charging

The Work and Pensions Committee (WPC) has published an exchange of letters between Frank Field, Chair of the WPC, and Andrew Bailey, Chief Executive of the FCA, in relation to contingent charging (ie where a fee for advice is only paid when a transfer goes ahead). In a letter to Mr Bailey dated 5 April 2019, the WPC said it remained “firmly of the view that urgent action is needed to protect pension scheme members from the scourge of contingent charging.” In October 2018, the FCA had said that it was not minded to ban the practice until it had carried out further work in the area.

In response, Mr Bailey said that the FCA’s work in the area was “progressing well”, that the FCA shared the WPC’s objective of ensuring customers are appropriately protected “whether through a ban or otherwise”, and that “something further” on contingent charging would be published in the summer.

Mr S (PO-14071) (re member identity due diligence)

TPO has rejected an appeal against an adjudicator’s decision, finding that a provider’s enhanced due diligence checks to verify an overseas member’s identity were not excessive or onerous.

For further detail, please see our case report.