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
- Brexit – legislation and guidance
- Financial Services (Consequential Amendments) Regulations 2020 published
- Parental Bereavement Leave regulations published
- New Orders published
- Private Members’ Bill published
- FCA handbook update
- HMRC issues pension schemes newsletter 116
- HMRC statistics on flexible pensions access
- TPR regulatory intervention report discusses CVAs
- TPR blog post on protecting savers
- “Game-changing” guidance on climate-related financial disclosure expected in March
- Stephen Timms to take over as Work and Pensions Committee chair
On 29 January 2020, the European Union (Withdrawal Agreement) Act 2020 (Commencement No. 1) Regulations 2020 and the European Union (Withdrawal) Act 2018 (Commencement No. 5, Transitional Provisions and Amendment) Regulations 2020 were made. These regulations bring into effect various provisions of the European Union (Withdrawal Agreement) Act 2020 (see 7 days) related to the withdrawal of the UK from the EU, including provisions on the application of EU law until 31 December 2020 (the “transition period”).
Various pieces of guidance have been released aimed at helping people to understand the post-Brexit position. These include:
- guidance from the DExEU on provisions for the continuity of international agreements during the transition period and
- a statement from the ICO on data protection and Brexit implementation, which confirms that the GDPR will continue to apply during the transition period, and that organisations that process personal data “should continue to follow [the ICO’s] existing guidance for advice on their data protection obligations”.
HMRC has updated its Pensions Tax Manual to reflect the fact that the UK has left the EU, in particular making consequential changes to provisions related to QROPS.
On 28 January 2020, the Financial Services (Consequential Amendments) Regulations 2020 were laid before Parliament, coming into force immediately before exit day (31 January 2020).
The aim of the regulations is to amend a number of financial services temporary permissions and transitional regimes established by instruments made under the European Union (Withdrawal) Act 2018 (see 7 days), so that they apply by reference to the end of the transition period (31 December 2020) rather than exit day.
The FCA has also advised that firms that submitted a “temporary permissions” notification need take no further action. It intends to confirm its plans for reopening the notification window later this year, to allow additional notifications to be made by firms before the end of the transition period.
Two sets of draft regulations have been published, aimed at implementing new statutory entitlements to Parental Bereavement Leave and Pay for employed parents who lose a child on or after 6 April 2020.
The Parental Bereavement Leave Regulations 2020 introduce an entitlement to two weeks’ leave, and the Statutory Parental Bereavement Pay (General) Regulations 2020 give an entitlement for bereaved parents who meet certain eligibility criteria to receive a statutory payment (paid at either the statutory flat rate of £151.20 per week for 2020/21, or 90% of average earnings calculated over a set reference period, whichever is the lower) whilst absent from work.
The following new Orders have been published:
- the Guaranteed Minimum Pensions Increase Order 2020 was laid before Parliament on 27 January 2020, and specifies the amount by which the GMP element of an individual’s occupational pension entitlement must be increased – 1.7% for the tax year 2020/21 and
- the Social Security Benefits Up-rating Order 2020 was laid before Parliament on 30 January 2020. Amongst other things, it confirms the increase in the full state pension from £168.60 to £175.20, a rise of 3.9%, in line with the “triple lock” (the Government’s current commitment to raise the state pension in line with the higher of CPI, earnings or 2.5%).
The Equal Pay Bill 2019-2020, a private members’ bill proposed by Baroness Prosser, was introduced to the House of Lords on 28 January 2020. The Bill contains provisions relating to equal pay, including an amendment to current legislation intended to “allow the court to award damages for loss of pension rights which would have accrued were it not for pay discrimination; in other words, had the claimant been paid the right amount equal to their comparator.”
On 31 January 2020, the FCA published Handbook Notice 73, which sets out updates to the FCA’s handbook. These include “changes to the handbook to ensure ESG issues and stewardship have been properly taken into account for workplace personal pensions and pathway solutions”, which will come into force on 6 April 2020. This relates to the FCA’s final rules to extend the remit of IGCs, published in December (see 7 days).
The Handbook Notice also explains that amendments that have already been made to the Handbook in connection with the UK’s exit from the EU will be deferred until the end of the transition period (11.00pm on 31 December 2019), although some references still need to be updated to reflect this.
On 28 January 2020, HMRC published pension schemes newsletter 116. It includes:
- statistics on the number of tax repayment claim forms processed for pension flexibility payments from 1 October to 31 December 2019
- detail on amendments via and recent problems with the Pension Schemes Online service and a request for feedback to help improve the Managing Pension Schemes Service, which will replace the current Pension Schemes Online service (see 7 days)
- information on downloading relief at source notification of residency status reports for 2020 to 2021
- a reminder of the consultation on the expansion of the existing Trust Registration Service (“TRS”) as a result of the 5th Anti-Money laundering Directive, published on 24 January 2020 (see 7 days). It notes that, for now, schemes should follow “the current registration guidance regarding taxable activity” and not register any other pension scheme on the TRS and
- an explanation that there will be a slight delay to publication of the next updates to the ROPS notifications list.
HMRC has released statistics on the amount of pension being accessed flexibly. The statistics suggest an increased level of take-up of flexible benefits, stating that through Q4 2019, £2.2 billion was withdrawn from pensions flexibly – an 18% increase from £1.9 billion in Q4 of 2018.
TPR has published a regulatory intervention report in relation to Arcadia Group Limited. The purpose of the report is “to highlight to the industry” what TPR expects of employers in company voluntary arrangement (“CVA”) scenarios, and “to educate them on the principles [they] assess CVAs against”.
The report says that TPR expects to be told at an early stage when a CVA is being considered that impacts a DB scheme: “employers and their advisers should engage with [TPR] early in the process and provide [them] with full information so [they] can work with the PPF to assess the impact of the CVA.” It also says that TPR expects “trustee boards and their advisers to be fully engaged and willing to work collaboratively with [TPR] and the PPF”.
On 31 January 2020, TPR published a blog post entitled “Trustees: protect savers by ensuring they can make the best choices”. It notes that TPR has been clear that in its view that “it remains unlikely it’s in the best financial interests of most members to transfer out of their DB scheme”.
The blog post goes on to discuss trustees’ responsibilities when members ask to make a transfer, stating that “ensuring that transfers are carried out correctly and safely is a cornerstone of good governance. The stakes are high – savers and their families bear the consequences of poor financial decision making which can have a lasting negative impact. By working together, and by referring to the industry code [on incentive exercises – see our Alert], the pensions industry can continue to ensure members have the time and information they need to make the best choices to ensure they have the money they need for retirement”.
The Parliamentary Under-Secretary of State for Work and Pensions, Guy Opperman, stated in Parliamentary questions on 27 January 2020 that “game-changing guidance on climate-related financial disclosure” will be published “in March”. He commented that “with over £1.6 trillion in assets, UK occupational pension schemes have a significant role to play in supporting the Government’s commitment to net zero by 2050. Our environmental, social and governance regulations, introduced by this Conservative Government in October 2019, mean that schemes are now required to disclose their policy on climate change” (see our Alert on the October 2019 requirements).
It was announced on 29 January 2020 that Stephen Timms, Labour MP for East Ham, will take over as chair of the Work and Pensions Committee. Mr Timms previously acted as Pensions Minister from 2005 – 2006 and in 2008.