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
- Regulations on redundancy pay for furloughed employees
- Opposite-sex civil partnership in Scotland
- Regulations on exit payments in the public sector
- EIOPA Financial Stability Report
- HMRC issues Pension Schemes Newsletter 122
- PASA publishes further COVID-19 guidance for administrators
- PLSA call for evidence on DC decumulation
- PLSA implementation statement guidance
- TPR blog on diversity
- WPC examines impact of pension freedoms and protecting pension savers
- WPC asks for input on small pension pots
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.
Regulations came into force on 31 July 2020, aimed at ensuring that furloughed employees under the Coronavirus Job Retention Scheme receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate. The regulations are not intended to impact any enhanced redundancy terms in an employee’s individual employment contract, but apply to basic statutory redundancy pay entitlements. They also cover other employment rights that rely on average weekly pay, including those relating to notice pay, unfair dismissal, and short-time working.
The Civil Partnership (Scotland) Act 2020 was given Royal Assent on 28 July 2020, allowing opposite-sex couples to become civil partners in Scotland. This follows on from the introduction of opposite-sex civil partnerships in England and Wales in December 2019 and Northern Ireland in January 2020 (see 7 Days).
Draft regulations have been published aimed at restricting prescribed public sector bodies from making exit payments above £95,000. This follows on from HMT’s response to consultation, which confirmed that the Government would take forward its proposals to introduce this cap (see 7 Days).
On 30 July 2020, EIOPA published its July 2020 Financial Stability Report of the (re)insurance and occupational pensions sectors in the EEA. The report consists of two sections – one part which discusses the key risks identified for the insurance and occupational pension fund sector, and “thematic articles”, which includes a discussion of EU sustainable finance taxonomy from the perspective of the insurance and reinsurance sector.
On 31 July 2020, HMRC issued Pension Schemes Newsletter 122. The newsletter covers a number of updates, including:
- noting the recent publications of the pensions tax relief administration call for evidence (see 7 Days), draft legislation on accommodating collective money purchase schemes in pensions tax rules (see 7 Days) and HMRC’s guidance on lump sum payments as a result of GMP equalisation (see 7 Days)
- extending the facility to report excess relief through the next interim claim, whether or not an annual claim for the year has been submitted, to the 2020/21 tax year
- a reminder on the requirements for submitting an annual return of information for the tax year 2019/20
- new features of the Managing Pension Schemes Service in relation to accounting for tax returns
- a reminder that, by 6 October 2020, schemes must issue AA pension savings statements for the tax year 2019/20 to members who made pension savings of more than the AA, and to inform members who have exceeded the AA and do not have sufficient unused AA to carry forward to cover the excess that they must declare this on their Self Assessment tax return
- statistics on flexible pension payments and QROPS transfers.
On 3 August 2020, PASA published further COVID–19 Guidance “designed to highlight best practice for administrators as they navigate their way out of lockdown”. This guidance follows on from its earlier COVID-19 guidance in March (see 7 Days), and covers a number of areas, including visibility and accessibility, digital workflow, offshoring, identity verification, investment managers and AVCs, and wellbeing and productivity.
The PLSA published a consultation on 28 July 2020 on proposals to establish a new regulatory regime requiring pension schemes to support their members when making decisions about how to access their DC pensions, including by offering or signposting to products that meet minimum quality standards. The aim is to “provide a proper framework that helps deliver a broadly consistent customer journey for savers across all the pension savings they may have”.
The call for evidence closes on 4 September 2020. Following analysis of responses, the PLSA intends to publish final recommendations in October 2020.
On 31 July 2020, the PLSA published guidance “to help DB and DC trustees navigate the new requirements to publicly disclose their investment and responsible investment activity over the previous year in an ‘Implementation Statement’”. The guidance aims to offer “practical, step-by-step support for trustees to produce meaningful and relevant disclosures” and sets out the PLSA’s views on:
- what the legislation requires and by when
- general principles for implementation statement content, and more detailed “possible considerations” for trustees
- specific considerations around voting behaviour disclosures, and
- ‘top tips’ for investment and responsible investment communications.
For details of the investment disclosure requirements, please see our ESG guide.
On 27 July 2020, TPR published a blog discussing “why diversity and inclusion in pension schemes has never mattered more”. It highlights that there is a “wealth of evidence highlighting how more diverse and inclusive teams drive better results”.
Schemes should “expect TPR to encourage, support and, in some cases cajole” schemes to “better embrace the need for diversity and inclusion particularly on trustee boards”. The blog notes TPR’s initiatives on diversity, including:
- its consultation on the future of trusteeship and governance (see our Alert)
- setting up an industry working group, which will “work towards creating a clear definition of what is meant by diversity and inclusion, providing practical tips for pensions schemes to improve their boards and case studies of those leading the way”
- the launch of a diversity and inclusion committee, which “will be responsible for providing insight to TPR’s executive committee on the overall diversity and inclusion strategy and action plan and acting as champions for the diversity and inclusion strategy across TPR”.
The WPC has announced that it will investigate pension scams in the first strand of a three-part inquiry into the impact of “the pension freedoms and the protection of pension savers”. The DC pensions freedoms were introduced in 2015 with the aim of ”giving people aged over 55 more control over how and when they could access their savings” (see our Alert). The broad inquiry will “look at how such people are protected as they move from saving for retirement to using their pension savings”. After an initial focus on scams, the inquiry will move on to looking at accessing pension savings and saving for later life, with a call for evidence “likely next year”.
The Committee has asked for written submissions on a number of specific questions related to pension scams by 9 September 2020.
On 31 July 2020, the WPC published an open letter to the pensions industry about small pots. The letter refers to the DWP’s call for evidence on the default fund charge cap and cost disclosure (see our Alert), which includes a question on consolidating small dormant/deferred pots. The WPC asks those responding to the call, and others, “to propose to the [DWP] workable solutions for consolidating very small pension pots”. It notes that “consolidating small pots might form a major part of reducing the total cost of saving to individuals, whilst enabling a sustainable, competitive market for lower paid employees”. It would also welcome solutions being sent to the WPC, as it intends to consider this topic further “early next year”.