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 transition period ends, EU-UK Trade and Co-operation Agreement reached
- Briefing papers on the end of the Brexit transition period and state pension uprating
- DWP publishes updated Brexit transition guidance
- FCA publishes final Brexit instruments and Temporary Transitional Power directions
- FCA to consult on TCFD-aligned disclosures
- TPR pension scam campaign receives 100 pledges
The Brexit transition period ended at 11pm on 31 December 2020 (“IP completion day”). After protracted negotiations, the EU-UK Trade and Co-operation Agreement (“the Agreement”) was announced on 24 December 2020. The Government has published a summary. The Agreement was signed on behalf of the EU on 30 December 2020, and will be provisionally applied as of 1 January 2021. The Agreement will be examined by the European Parliament and the Council before it can be ratified by the EU.
The European Union (Future Relationship) Act 2020 received Royal Assent on 30 December 2020. Among other things, this Act provides the Agreement with domestic legal effect and enables it to be ratified by the Government.
The key points include:
- the Agreement provides for transfers of personal data between the UK and the EU to continue for a further transitional period (of up to six months) while an adequacy decision is agreed. The ICO recommends that businesses work with EU and EEA organisations who transfer personal data to them, to put in place alternative transfer mechanisms, to safeguard against any interruption to the free flow of EU to UK personal data
- the law governing UK-EU/EEA cross-border occupational pension scheme arrangements will cease to apply from 1 January 2021. (On 18 December 2020, TPR had updated its guidance on cross-border schemes in the event of a no-deal Brexit; it intends to publish revised guidance in early 2021 on how trustees should manage cross-border aspects of their schemes for the post-transition period).
The House of Commons Library has published a webpage collating various briefings on policy areas and sectors impacted by the end of the Brexit transition period, and has also updated its briefing papers on Brexit and private pensions and Brexit and state pensions to take account of the recent developments.
The House of Commons Library also published a briefing paper on state pension uprating. This paper focuses on the current policy regarding the uprating of state pension and pension credit for members who have reached state pension age, including the implementation of the Social Security (Uprating of Benefits Act) 2020.
The DWP has updated its guidance explaining the rights of UK nationals in the EU, the EEA or Switzerland to benefits and pensions from 1 January 2021. The updated guidance confirms that the state pension will be increased each year in the EU in line with the rate paid in the UK. It clarifies which benefits can be claimed by those who move to the EU permanently, and explains what evidence people living in the EU by 31 December 2020 may need to provide to claim UK benefits.
This is further to its previous update on 19 October 2020.
“Onshoring” was the process of amending EU legislation and regulatory requirements so that they work in a UK-only context now that the Brexit transition period has ended. The onshoring process means that there are some areas where the requirements on firms and other regulated persons have changed. To help firms adapt to new requirements, HMT gave UK financial regulators the power to make transitional provisions to financial services legislation for a temporary period. This is known as the Temporary Transitional Power (“TTP”).
The TTP will be applied on a broad basis from the end of the transition period until 31 March 2022, but there are some areas where the TTP will not apply.
On 31 December 2020, the FCA released a statement on the use of the TTP to modify the UK’s derivatives trading obligation. The FCA confirmed it will keep its use of the TTP under review and will consider by 31 March 2021 whether market or regulatory developments warrant a review of its approach.
A new webpage has also been created which explains how the FCA has prepared its Handbook and binding technical standards for the end of the transition period.
The FCA has confirmed it plans to consult in the first half of 2021 on potential TCFD-aligned disclosures by UK-authorised asset managers, life insurers and FCA-regulated pension providers designed to better inform their clients and end investors.
The FCA’s Policy Statement PS20/17 summarises the feedback the FCA received to its Consultation Paper CP20/3 and contains a final rule and guidance intended to promote better climate-related financial disclosures for UK premium listed commercial companies.
The FCA also notes that the DWP is pursuing an amendment to the Pension Schemes Bill that will give it the power to require climate-related disclosures by occupational pension schemes. The DWP issued a consultation in August 2020 proposing a phased implementation of mandatory obligations, beginning with the largest schemes from 2022.
TPR has announced that its campaign urging the pensions industry to publicly pledge to combat pension scams has seen more than 100 pledges since its launch. A month on from the campaign’s launch, 117 pledges have been made, including by three master trusts. A further 37 of those that pledged have also self-certified to confirm they have adopted stringent practices on due diligence, member warnings and reporting scams demanded by the pledge campaign.