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.

ESAs consult on ESG disclosure standards

On 23 April 2020, the three European Supervisory Authorities (EBA, EIOPA and ESMA) issued a Consultation Paper on proposed ESG disclosure standards for financial market participants, advisers and products, relating to obligations under European disclosure regulations made at the end of 2019. The standards aim to:

  • strengthen protection for end-investors
  • improve the disclosures to investors from a broad range of financial market participants and financial advisers and
  • improve the disclosures to investors regarding financial products.

The consultation closes on 1 September 2020.

FCA changes to regulatory reporting

On 22 April 2020, the FCA announced an extension to submission deadlines for certain regulatory returns, including annual financial reports. A list of the types of return covered is provided on the FCA’s webpage, with different categories receiving different lengths of extension (from one to two months). The extension applies for submissions that are due up to and including 30 June 2020. Firms are still expected to submit their returns “as soon as possible” and should they miss a deadline (in the period up to 30 June), the FCA will send a reminder letter to them. The FCA states that over the coming weeks it “will continue to monitor the situation and will keep these changes under review”.

FCA expectations for wet-ink signatures in light of Coronavirus

On 20 April 2020, the FCA set out its expectations of firms when dealing with the need for ‘wet-ink’ signatures (ie signing a document by hand using a pen) in light of practical difficulties caused by Coronavirus.

In relation to agreements, the guidance clarifies that FCA rules “do not explicitly require wet-ink signatures in agreements, nor do they prevent firms from using electronic signatures in agreements”. It notes that the validity of electronic signatures is a matter of law, and recommends that firms take legal advice. It also reminds firms that they must consider any related requirements set out in the FCA’s principles for businesses and general rules. The guidance goes on to confirm that electronic signatures will be accepted for all interactions with the FCA, eg in completing FCA forms.

FRC guidance on modified audit opinions due to Coronavirus

On 21 April 2020, the FRC issued guidance on modified auditors’ opinions and reports during the Coronavirus pandemic. The guidance states that a modified opinion might be required “where management’s key judgements in areas such as asset and liability valuations, or the assumptions and cashflow estimates underpinning the use of the going concern basis of accounting, may be difficult to support in the light of wider economic and political uncertainty, or not agreed by the auditor”. It then sets out how the opinion can be modified depending on the circumstances, in particular “whether the auditor has been able to obtain sufficient, appropriate audit evidence to form an opinion on whether the financial statements are free from material misstatement and how pervasive any error may be to the financial statements”.

Updated guidance and regulations on Coronavirus Job Retention Scheme

The Government has continued to update its guidance on the Coronavirus Job Retention Scheme (“CJRS”), including:

  • new information added to HMRC’s guidance, on collective agreement reached with trade unions, and clarifications to eligibility criteria including for employees on fixed-term contracts
  • an announcement that furloughed workers planning to take paid parental or adoption leave will be entitled to pay based on their usual earnings rather than a furloughed pay rate.

In addition, regulations were laid before Parliament on 24 April 2020 aimed at preventing an employee from experiencing disadvantage in relation to family-related statutory payments as a result of being placed on temporary leave under the CJRS. The amendments are intended to ensure that an employee’s eligibility for family-related statutory pay and their earnings-related rate of Statutory Maternity Pay, Maternity Allowance or Statutory Adoption Pay is the same as it would have been had they not been furloughed.

New TPAS page on Coronavirus and pensions

On 21 April 2020, TPAS published a new page on its website discussing Coronavirus and pensions. The page is aimed at people considering making changes in relation to their pensions because of Coronavirus. TPAS highlights that pension decisions based on short-term events “can have long-term consequences”, and that it is “important to get independent guidance or advice” before making major decisions. The page includes a number of FAQs for individuals relating to the impact of Coronavirus on pensions.

TPO reopens for business

TPO has updated its website with a statement that, as of 22 April 2020, it will accept new applications (as well as continuing to work on existing cases). It had previously said that it was temporarily dealing only with existing complaints (see 7 Days). It will still only accept online applications and email enquiries, and cannot accept post, and the website notes that it might take longer to deal with complaints and enquiries.

It states that it will continue to use its discretion where possible to extent its time limits for cases affected by the periods of restricted service but includes a reminder that time limits for some complaints are shorter than others (those in relation to the PPF and FAS), and that it has no discretion to extend time limits in relation to PPF “reviewable matters”. Those with complaints of this sort are urged to contact TPO by telephone as soon as possible.

Scams guidance from TPR and the PPF

TPR has published updated guidance on avoiding pension scams. The guidance explains how pension scams work and what the warning signs of a scam are. It then goes on to set out steps for trustees, business advisers and employers to take to help avoid pension savers falling for a scam.

The advice includes a note (reflecting earlier statements and guidance – see 7 Days) that, due to Coronavirus, savers “might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets”. This means they “could be increasingly targeted by scammers attempting to lure them to ‘safe havens’”. If a saver asks about transferring their pension, TPR states that they should be urged to “exercise extreme caution and visit ScamSmart which has specific guidance relating to COVID-19”.

Separately, the PPF has issued guidance for its members on how to avoid scams. This includes an explanation of various types of scams, advice on how to spot fraudulent communications and how members can protect themselves.

Temporary changes to pensions tax for returning public sector workers

On 22 April 2020, John Glen, the Economic Secretary to the Treasury, made a written statement in the House of Commons in relation to easements on pensions tax for public sector workers (subsequently clarified in a letter to the Minister of State for Crime and Policing). Aiming to help remove barriers to public sector workers returning to support the Government’s response to Coronavirus, the Government intends to “temporarily suspend tax rules that would otherwise apply significant tax charges to pension income received by recently retired individuals aged between 50 and 55”, alongside “complementary changes to rules for relevant public service pension schemes (subject to relevant HM Treasury agreement)”.

The proposed changes will initially apply in respect of payments made in the period from 1 March to 1 June 2020 and only “to people returning to roles as a result of COVID-19”. HMRC will set out operational guidance “in due course” and the Economic Secretary is “working with colleagues to identify relevant workforces who should benefit from these changes”.

WM Morrison Supermarkets plc v Various Claimants (Judgment of the Supreme Court – 1 April 2020)

The Supreme Court has held that Morrisons was not vicariously liable for the acts of one of its employees who, pursuing a personal vendetta, illicitly copied employee data given to him in his role as an auditor and published it online.

The judgment examined the test for vicarious liability of an employer for its employees’ actions, and also whether data protection legislation excludes vicarious liability for breach of its terms. Although the case relates to the Data Protection Act 1998, the reasoning is still relevant under the Data Protection Act 2018 (“DPA18”).

This decision will come as a relief to employers, but employers and trustees should still ensure that their employees’ and members’ data is sufficiently protected, as required by the GDPR and the DPA18.

For further detail see our case report.