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
- European Commission publishes draft adequacy decision
- Government expects pension schemes to monitor human rights social risks to their investments
- Government prepares for further extension of insolvency and company law temporary easements
- PDP launches call for input from data providers on identity standard
- PPI publishes report on “Engaging with ESG”
- Supreme Court rules Uber drivers are workers under Employment Rights Act 1996
- TPR blogs on Pension Schemes Act powers and climate change strategy
- TPR reports rising enforcement activity
Over the past months, the European Commission (“EC”) has assessed the UK’s law and practice on personal data protection and on 19 February 2021 it published two draft UK adequacy decisions which, if adopted, will allow for continued free flow of personal data from the EU into the UK. As well as its decision under the General Data Protection Regulation, the EC also published another draft decision for personal data related to law enforcement.
The publication of these draft adequacy decisions is the beginning of a process towards their adoption. The decisions are now with the European Data Protection Board (“EDPB”) who will deliver an opinion to the EC and representatives from the EU member states.
During this process, UK businesses and public authorities will continue to be able to receive data from the EU under the adequacy bridge agreed in the EU-UK Trade and Co-operation Agreement (see 7 Days).
The Government has answered two parliamentary written questions on how pension funds and other institutional investors comply with the UN Guiding Principles on Business and Human Rights and how they take into account crimes against humanity and genocide as social risk factors. The answer highlights that the Government expects “institutional investors to be monitoring risks to their investments posed by breaches of international human rights law”.
Noting that some investors have not focussed on social factors as much as environmental factors, the DWP has “written to 40 large schemes to understand their current practices [and also]…intends to seek views on whether occupational pension schemes’ policies and practices on social risk factors are sufficiently robust and what the government could do to ensure that trustees are able to meet their legal obligations in this respect”.
The Corporate Insolvency and Governance Act 2020 delivered, amongst other things, some temporary modifications and easements to insolvency and company law to help mitigate the impact of the COVID-19 pandemic. In addition, it provided a power for these modifications and easements to be extended by regulations. However, there was originally a 30 April 2021 end date on the use of this power. Draft regulations have now been published which extend this backstop to 29 April 2022. Keeping this power available for a further year is intended to “provide a means for specific and temporary changes to be made to corporate insolvency and governance legislation should the urgent need arise to do so, which will allow quick reactions to unforeseen challenges arising as a result of the pandemic’s impact on business”.
In December 2020, the Pensions Dashboards Programme (“PDP”) published key data standards for the forthcoming dashboards (see 7 Days). These noted that, to access dashboards, users will need to share their personal data via an identity service, so they can be matched to the pensions they hold.
The PDP has now launched a call for input on the approach to be taken towards the identity service, following its identity service market engagement in 2020. An identity is described by PDP as “a combination of verified attributes about an individual which, when considered in unison, can provide assurance that a person is who they say they are”. The PDP is looking to verify its approach with data providers, to understand the level of assurance they will require to release data to the users.
The call for input closes on 19 March 2021.
The Pensions Policy Institute (“PPI”) has published the second report in the PPI’s “Engaging with ESG” series (see 7 Days). The new report explores attitudes and the approaches currently being implemented in relation to climate change, with the aim of highlighting areas where further support, guidance or intervention could be beneficial in order to improve engagement and implementation of appropriate risk management.
The Supreme Court has unanimously ruled that Uber drivers are “workers” for the purposes of legislation giving workers rights to various statutory entitlements. Former Pensions Minister Sir Steve Webb commented that, while Uber drivers “should now qualify for the national minimum wage and other employment rights […] this does not automatically mean they come within the scope of automatic enrolment into workplace pensions […] It is possible that further court cases will be needed before it is clear whether Uber drivers can also join those with a right to a workplace pension.”
TPR has published a blog about the new Pension Schemes Act 2021. The blog confirms that the second DB funding code consultation is expected “in the second half of 2021”. It discusses the new powers granted to TPR by the Act, noting that the legislation “provides a strong package of measures which will make using [its] powers more efficient and introduces deterrents against behaviour that risks savers’ benefits.”
According to the results from a Sackers webinar survey, 57% of respondents have concerns in relation to TPR’s new powers. Peter Murphy, Sackers partner, commented: “Regardless of when exactly TPR’s new powers will take effect, now is the time to recognise what they are seeking to achieve and act accordingly. Where there is a relevant DB pension scheme, significant corporate decisions will need to be carefully considered in the context of TPR’s new powers. Trustees genuinely have a seat at the corporate stakeholder table, and they will need to engage responsibly.”
In addition, the blog discusses how the Pension Schemes Act 2021 encourages trustees to engage with the issue of climate change, and reveals TPR will be launching its own climate strategy “later in the spring”. The strategy will “take a targeted, forward-looking approach and suggests that a landscape of resilient schemes that protect savings from climate risk is within reach”.
TPR has published the latest edition of its compliance and enforcement bulletin which details enforcement activity carried out between October and December 2020. It shows TPR’s use of statutory powers has increased by nearly 50% overall from the previous quarter. While compliance with the law remains high, automatic enrolment enforcement was seen to return to normal levels, following the lifting of easements put in place in March 2020 to support employers struggling with the immediate impact of the COVID-19 pandemic (see our Alert).