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
- Master trusts: TPR’s Code of Practice in force
- FCA and TPR launch joint regulatory strategy
- Consultation on increasing FOS compensation limits
- PASA publishes further GMP guidance
- PASA announces new Chair
- “Simpler Annual Statement” released
- PPF implements measures to increase compensation following CJEU ruling
- PPI publishes Briefing Note 110
- TPR issues first improvement notice to a public service pension scheme
- Government to consult on CDC pensions
The Pensions Act 2004 (Code of Practice) (Authorisation and Supervision of Master Trusts) Appointed Day Order 2018 has been made, formally bringing into force TPR’s Code of Practice on the authorisation and supervision of master trusts on 18 October 2018. The finalised version of the Code had been laid before Parliament in July 2018.
On 18 October 2018, the FCA and TPR issued their new joint regulatory strategy. This followed a call for input earlier in the year. It comes with the aim of “strengthening their relationship, and taking joint action to deliver better outcomes for pension savers and those entering retirement.”
The strategy identifies key contributing factors to people having insufficient, or less than expected, income in retirement. The FCA and TPR set out a vision for the sector over the next five to ten years, making clear their “areas of priorities”, and setting out the ways in which the two regulators plan to work together going forward.
Two initial priority areas for joint action are set out:
- a strategic review of “the entire consumer pensions journey”, taking an in-depth look at what tools are needed to enable people to make considered decisions about their pensions, and
- using their powers “to drive value for money for members of pension schemes”, including the setting and enforcement of clear standards and principles where relevant.
At the same time, the FCA and TPR published a feedback statement on the issues highlighted through the call for input.
On 16 October 2018, the FCA and FOS issued a consultation on proposals to increase FOS award limits. The ombudsman service can currently require firms to pay awards of up to £150,000 to complainants. It can recommend higher awards, but it cannot require firms to pay them.
The following changes are proposed:
- a new upper limit of £350,000, for new complaints relating to acts or omissions on or after 1 April 2019
- an increased limit of £160,000 for complaints in relation to acts or omissions before 1 April 2019, which are referred to the FOS after that date
- that, from 1 April 2020 onwards, award limits should be automatically adjusted yearly to ensure they keep pace with inflation, in line with CPI.
The limit will remain at £150,000 for any complaints referred to the FOS before 1 April 2019.
Comments on the consultation should be submitted by 21 December 2018. The FCA intends to publish its final rules in a policy statement in early March 2019.
On 19 October 2018, PASA launched its next tranche of GMP guidance. The guidance focusses on cases which were unable to be rectified during a reconciliation exercise and therefore reach “stalemate” status, in terms of seeking to resolve them with HMRC. The guidance also looks at the solutions available, and aims to facilitate discussion between trustees and administrators.
PASA has announced the election of Kim Gubler as Chair of its Board, effective from 1 January 2019. Ms Gubler replaces Margaret Snowdon, who will remain part of PASA in the newly created non-executive role of President.
On 18 October 2018, the new “Simpler Annual Statement” (and accompanying guidance) was launched at the PLSA Annual Conference by Pensions Minister Guy Opperman. The aim of the statement, which was produced by Ruston Smith, an adviser to the Government on its review of automatic enrolment, with input from the pensions industry (including the PLSA), is to help pension schemes and providers “give savers just the key information they need, presented in plain English and with more consistency”.
The guidance confirms that the DWP and TPR “are content that the simpler statement represents an example of a good practice”, and that it meets existing disclosure requirements if used correctly. Further changes will be required to meet future changes to disclosure regulation.
Following the recent judgment of the CJEU in Grenville Hampshire v the Board of the Pension Protection Fund, the PPF has announced that it has started to write to members it believes to be affected by the ruling. The judgment held that PPF members should not receive less than 50% of their accrued entitlement in the event of their employer’s insolvency. The PPF states that it will work “to implement the judgment as quickly as possible” for those members affected, although it expects the number of eligible members affected to be very small.
The PPF states that it has been working with the DWP regarding the changes that may result from the judgment, to ensure its approach “is likely to be consistent with the necessary future changes to legislation”. In advance of legislation, it is putting in place an interim process to uplift payments.
The PPI has published Briefing Note 110: Lost Pensions: what’s the scale and impact? The note examines the estimated value of lost pension policies, as well as the effectiveness of current processes to reunite individuals with their retirement savings.
TPR has published a regulatory intervention report into a case where a scheme failed to issue annual benefit statements to around 14,000 members. TPR issued the scheme manager with an Improvement Notice, “holding them to the changes they proposed making to the scheme’s internal controls and systems to achieve compliance with pensions legislation and prevent a future recurrence”.
The Government states that it will consult on the Committee’s proposals in the Autumn. It also confirms that new primary legislation, together with underlying secondary legislation, will be required to enable CDC pensions, and that this will be brought forward “as soon as Parliamentary time allows”.