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
- Government extends insolvency measures
- Job Support Scheme announced
- Government launches cross-sector small pots Working Group
- DWP publishes automatic enrolment alternative quality requirement consultation
- PLSA publishes vote reporting templates
- Social Security (Up-rating of Benefits) Bill published
On 24 September 2020, the Government announced that certain of the measures “put in place to protect businesses from insolvency will be extended to continue giving them much-needed breathing space” during the coronavirus pandemic. A raft of changes to protect businesses from insolvency were introduced in the Corporate Insolvency and Governance Act (see our Alert for details). Certain measures were temporary and were due to expire on 30 September 2020. Those being extended include the following:
- companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 30 December 2020
- statutory demands and winding-up petitions will continue to be restricted until 31 December 2020 “to protect companies from aggressive creditor enforcement action as a result of coronavirus related debts”
- modifications to the new moratorium procedure, which relax the entry requirements, will also be extended until 30 March 2021. A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding-up petition.
The current Coronavirus Job Retention Scheme (“the CJRS”) comes to an end on 31 October 2020 (see 7 Days). On 24 September, the Chancellor announced its replacement, the Job Support Scheme (“the JSS”), “to support viable UK employers who face lower demand due to COVID-19, and to keep their employees attached to the workforce”. The JSS will run from 1 November 2020 for six months.
In brief, employees will need to work a minimum of 33% of their usual hours. For every hour not worked, the employer and the Government will each pay one third of the employee’s usual pay, with the Government’s contribution capped at £697.92 per month. This is intended to ensure that employees using the scheme will receive at least 77% of their pay, where the Government contribution has not been capped. The employer will be reimbursed in arrears for the Government contribution. The employee must not be on a redundancy notice.
The scheme is open to all employers with a UK bank account and a UK PAYE scheme. All small and medium-sized enterprises will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and the Government expects that large employers will not be making capital distributions (such as dividends) while using the scheme.
HMT’s JSS Factsheet states that:
- grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer
- “usual wages” calculations will follow a similar methodology as for the CJRS. Full details will be set out in guidance shortly. Employees who have previously been furloughed will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough
- employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. The expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
On 22 September 2020, Guy Opperman, Minister for Pensions and Financial Inclusion, announced the launch of a cross-sector Working Group, to assess and make recommendations, “as an interim step”, on ways to tackle deferred, small pension pots. This follows the WPC’s earlier call for input on the subject (see 7 Days).
The new Working Group is intended to complement the work being undertaken on the pensions dashboards, to identify the priority option or combination of options to help tackle the growth of small deferred pots. It will report “later this Autumn with an initial assessment, recommendations and an indicative roadmap of actions for industry, delivery partners and Government.”
The PPI has also published a Briefing Document intended to support the Working Group, “Small Pots: What they are and why they matter”, setting out the potential problems associated with small pots, how policy solutions to these could be approached, and the trade-offs that need to be considered.
On 22 September 2020, the DWP published a call for evidence inviting views on the alternative quality requirement test for DB and hybrid schemes. This was introduced to allow for simpler alternative tests to be used so that a scheme can demonstrate that it is of sufficient quality for use as an automatic enrolment scheme.
Following a call for evidence published in 2017 (see 7 Days), the DWP now asks whether the Government’s policy intentions in this area continue to be achieved, how the simplifications and flexibilities introduced under the test work in practice, and whether any new issues have arisen since the last triennial review (reviews are required at three-yearly intervals).
The consultation closes on 21 October 2020.
On 24 September 2020, the PLSA published vote reporting templates which are intended to help pension schemes, investment managers and platform providers disclose how they exercise their shareholder voting rights.
Recent changes to the law, which come into effect in October 2020, mean pension fund trustees must demonstrate how they are acting as effective stewards of their assets (see our Alert for details). An important way to demonstrate this is to disclose how they are using their voting rights to support or sanction corporate behaviour among their investee companies.
The PLSA’s templates are designed to be used as companions to the recently published PLSA Implementation Statement Guidance, which includes a specific chapter on how to produce clear, effective and meaningful disclosures on voting behaviour in the trustees’ Implementation Statement.
The Government has introduced the Social Security (Up-rating of Benefits) Bill to the House of Commons. This Bill allows the Secretary of State to up-rate the basic pension (and certain other benefits) in the tax year 2021-22, despite there being no growth in earnings in the period May-July 2020. This will allow the Government to meet its commitment to the “Triple Lock” (the increase of the state pension by the higher of price inflation, earnings growth and 2.5%).