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

Coronavirus – Sackers response

At Sackers we are committed to ensuring that the Coronavirus outbreak causes minimal disruption for our clients, and have taken several steps to ensure it is ‘business as usual’. For details of these steps, as well as key points for trustees and employers to consider in light of the outbreak (which we will continue to update), please see the dedicated section of our website, or talk to your usual Sackers contact.

Finance Bill 2019-21

The Finance Bill 2019-21 was given its first reading in Parliament on 17 March 2020. The Bill largely legislates for announcements made in the March 2020 budget. In relation to pensions, this includes amendments to shift the main thresholds applicable to the tapered AA upwards by £90,000 for the 2020/2021 tax year (see our Alert).

The Bill also amends insolvency legislation to give HMRC priority in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings (first announced in July 2019 – see 7 days). This moves HMRC up the creditor hierarchy for the distribution of assets if a company enters insolvency. It could impact occupational pension scheme trustees’ ranking on an insolvency and therefore the amount they may ultimately recover. The insolvency changes were originally scheduled for 6 April 2020, but now come into effect on 1 December 2020.

The date for Bill’s second reading has not yet been announced.

Coronavirus Bill 2019-20

On 19 March 2020 the Coronavirus Bill 2019-21 was given its first reading in Parliament. The Bill is intended to “enable the Government to respond to an emergency situation and manage the effects of a COVID-19 pandemic”. On pensions, the Bill suspends certain rules that apply in the NHS Pension Scheme, with the intention that healthcare professionals who have recently retired can return to work and those who have already returned can increase their hours without there being a negative impact on their pension entitlements.

The second reading of the Bill is scheduled for today, 23 March 2020.

Automatic enrolment regulations for maritime workers published

On 16 March 2020, two sets of regulations were laid before Parliament: the Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020 and the Automatic Enrolment (Offshore Employment) (Amendment) Order 2020. The intention of these regulations is that seafarers and offshore workers continue to be covered by auto-enrolment obligations. Both sets of regulations come into force on 30 June 2020.

Off-payroll working changes delayed until April 2021

On 18 March 2020, HMT published a statement confirming that reforms to extend off-payroll working rules (IR35) to the private sector (see 7 days) have been delayed by 12 months “as part of the government’s COVID-19 economic response package”, and so will now come into force on 6 April 2021. The new introduction date will be legislated for in the upcoming Finance Bill (see above).

Possible extension for filing company accounts

Companies House has issued a statement on the possibility of a deadline extension for companies that find themselves unable to file their accounts as a result of Coronavirus (which could apply to trustee companies). Companies may make an application to extend the period allowed for filing if they fall into this situation, but this should be done in advance of the deadline. If an extension is not applied for and accounts are filed late, an automatic penalty will be imposed, although an appeal may be possible.

FCA guidance on Coronavirus

On 17 March 2020, the FCA published guidance for firms on responding to Coronavirus. The guidance states that the FCA “stands ready to take any steps necessary to ensure customers are protected and markets continue to function well”. The FCA expects firms “to be taking reasonable steps to ensure they are prepared to meet the challenges coronavirus could pose to customers and staff, particularly through their business continuity plans”. Firms should report to them “immediately” if they believe they will be in difficulty.

The guidance covers areas including regulatory change, impact on consumers, insurance products, operational resilience and market trading and reporting. It confirms that the FCA is reviewing its work plans so that it can “delay or postpone activity which is not critical to protecting consumers and market integrity in the short-term”, has extended the deadline for a number of consultation papers and calls for input until 1 October 2020, and will delay various publications which were due before the end of June.

The FCA also published guidance for insurance firms on 19 March 2020, setting out its expectations of insurers during the pandemic.

FRC guidance on Coronavirus

The FRC has published a range of guidance on the impact of Coronavirus on audits and corporate reporting. This includes guidance for auditors who may be facing practical difficulties in carrying out audits as a result of the pandemic. This states that audits “should continue to comply fully with required standards”. It acknowledges that in current circumstances additional time may be required to complete audits and “it is important that this is taken, even at the risk of delaying company reporting… In some cases, companies may need to reconsider their reporting deadlines”.

GMP equalisation guidance – “when to rectify”

On 17 March 2020, the cross industry GMP Equalisation Working Group, issued its latest guidance: ‘When to Rectify’.

This new guidance relates to making corrections as a result of GMP reconciliation, known as GMP rectification.  It recommends steps trustees should undertake to ensure they make the right decision for their scheme. These include:

  • understanding the data: the number of members requiring rectification and how this population overlaps with those in scope for GMP equalisation
  • understanding the nature and timing of the task: when to rectify benefits, the potential approaches available and how the rectification project dovetails with the work required for GMP equalisation
  • considering the impact on members who are in scope for GMP rectification of any delay whilst finalising the equalisation project
  • documenting and consider the scheme’s position: this focusses on the factors that will influence the decision about when to undertake rectification for those also impacted by equalisation.

ICO guidance on Coronavirus

The ICO has published guidance on data protection in light of the Coronavirus pandemic. On 16 March 2020, it released general data protection advice for data controllers and a blog post.

This guidance contains some reassurance for controllers concerned about data protection practices at this time. The ICO understands that “resources, whether they are finances or people, might be diverted away from usual compliance or information governance work”. The ICO states that it won’t penalise organisations that it knows “need to prioritise other areas or adapt their usual approach during this extraordinary period”.

In relation to increased homeworking, the ICO comments that while data protection law doesn’t prevent the use of workers’ own devices or communications equipment, organisations will “need to consider the same kinds of security measures for homeworking” that would be applied in normal circumstances.

The ICO also published a blog post aimed at the public on 18 March 2020, with information on some key concerns they may have about their personal data.

PPF Coronavirus guidance and contingent asset requirement changes

On 18 March 2020, the PPF published guidance on its measures for responding to the impact of Coronavirus. This includes changes to its requirements for submitting contingent asset documents:

  • documents should not be provided in hard copy, but should be emailed to information@ppf.co.uk (instructions on eg file size are given)
  • the PPF can’t formally approve extensions in advance, but it understands “that key individuals might not be able to finalise documents because they are unwell or in self-isolation” and, where documents are submitted after the deadline, it will “consider the circumstances” and “where it’s reasonable”, accept them. Reasons for late submission must be provided when documents are sent
  • on e-signatures, for PPF-specific documents, for example officer’s certificates, the PPF will accept “other forms of confirmation that the form is authorised, such as signatures produced by e-sign software”.  For documents that are intended to have legally binding effect beyond the PPF-specific requirements, the PPF recommends that organisations speak to their legal advisors
  • to the extent that there are “known/expected impacts of COVID-19 that can be estimated”, these should be taken into account in assessing contingent assets and asset-backed securities in March 2020. However, “reflecting the material uncertainty over future economic impacts of the virus, and the impact that government responses to it may have, there is no need to make further allowance for this general uncertainty. Reports should therefore indicate what assumptions have been made, rather than seeking to exclude consideration of COVID-19”.

PPF levy scoring confirmed

On 19 March 2020, following a consultation launched in December 2019 on changes to the methodology used to calculate insolvency risk scores (see 7 days), the PPF published a new policy statement and confirmed that the new insolvency risk scores will start to be used for levy invoices from 2021/22.  The basis for scoring is “substantially unchanged from that consulted on”. However, the PPF has used feedback to “help improve services “(for example, releasing new portal functionality) and has “carefully considered” suggestions for changes to the insolvency risk methodology.

The policy statement also confirms, in reference to the Coronavirus pandemic, that the PPF does not plan to publish its final rules for the 2021/22 levy year until December 2020, and will “monitor developments carefully” and consider what, if any, changes to its rules are “necessary in view of these exceptional circumstances”.

PPF guidance on trustee contingency planning

On 17 March 2020, the PPF released guidance for trustees on contingency planning. The guidance advocates contingency planning “to think through what challenges might surface should there be an issue with the employer”. It recommends doing this thinking “while the employer is stable, and having articulated procedures and responses to issues in advance”. It sets out suggested steps for contingency planning, depending on the strength of the employer covenant, and a checklist of key points for trustees to make sure they have in place.

TPR updated guidance on Coronavirus and suspension of initiatives

On 20 March 2020, TPR published updated guidance for trustees, employers and administrators on dealing with the impact of Coronavirus. Key points are that:

  • trustees, employers and administrators should focus their activities on the key risks to pension savers eg paying benefits, minimising the risk of scams, continuing employer contributions and supporting member decision-making. TPR notes that “some administrative breaches of the law may occur” and that it “will maintain a proportionate and fair approach” to any action taken
  • trustees are expected to: assess whether their business continuity plan is still adequate; contact their administrator/service provider about their contingency plans; make priorities clear in the event of under-resourcing. Trustees of DB schemes should also read the further guidance on corporate distress
  • the situation could lead to increased targeting by scammers, attempting to “lure” savers to a “safe haven”. TPR recommends that, if a saver asks about transferring their pension, trustees should “urge them to exercise extreme caution and visit ScamSmart which has specific guidance relating to COVID-19”. Trustees should also signpost their members to the Money and Pensions Service
  • administrators should “prioritise payments of benefits, retirement processing and bereavement services”. After this, they should focus on the processes needed “to ensure accurate benefits (eg investment of contributions)”
  • trustees and administrators should report to TPR immediately if they believe they will be unable to pay members’ benefits. Everything else should be reported as normal and TPR “will take a pragmatic approach” in its responses
  • for employers, TPR says it “will take a proportionate and risk-based approach towards enforcement decisions, in light of these challenging times, with the aim of helping to get employers back on track and supporting both employers and savers”.

The guidance confirms that TPR is temporarily suspending its regulatory initiatives and will be in direct contact with those schemes affected, regarding expectations and next steps. It is also postponing the publication of its Corporate Plan, long-term strategy, and consultation on bringing together its codes of practice to form one single code (see 7 days). TPR will review timings of its DB funding consultation “in the coming weeks”, and has cancelled or moved all scheduled events.