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

• Regulations give TPR further data-gathering powers
• FRC publishes report to aid prospective signatories to the Stewardship Code
• Tax review ruled out
• HMRC publishes Pension Schemes Newsletter 124
• FCA confirms planned consultation on TCFD disclosures
• ICO consultation on draft statutory guidance launched
• PPF publishes levy consultation
• PPF announces changes to actuarial factors
• TPR blogs on climate change

Regulations give TPR further data-gathering powers

The Investigatory Powers (Communications Data) (Relevant Public Authorities and Designated Senior Officers) Regulations 2020 came into force on 25 September 2020.

Among other things, these regulations give TPR more extensive data-gathering powers to fight pensions criminal offences. They empower TPR to request authorisation to obtain “communications data” (ie information about the timing of and method by which a communication (including telephone calls or emails) was sent), for the purpose of preventing or detecting crime. Authorisation can be sought from a designated senior officer within TPR in urgent cases.

FRC publishes report to aid prospective signatories to the Stewardship Code

The FRC has published a Review of Early Reporting, following the introduction of annual Stewardship Reports mandated by the UK Stewardship Code 2020 (see 7 Days) which took effect from 1 January 2020).

The review seeks to help prospective signatories to the Code in their planning by reiterating the Code’s requirements for high quality disclosure, expanding on what the FRC expects to see from reports and highlighting good examples. Investors’ reports should:

• fully explain the structures, processes and rationale that underpin stewardship decision-making
• address all asset classes and geographies
• focus on activities and outcomes, supported by specific evidence.

Tax review ruled out

The Government has ruled out an immediate review into the impact of pensions tax relief (which was recommended by the Public Accounts Committee (see 7 Days)).

Having noted that it has already undertaken several major consultations on aspects of pensions tax relief over the last few years, and found “no clear consensus for reform”, in its response to the PAC’s report the Government states that it “will continue to engage with stakeholders” but “does not think it is the right time now for a formal evaluation”. However, HMRC will be asked to “assess the groups and sectors benefiting from all significant reliefs” and publicly report the results by December 2021.

HMRC publishes Pension Schemes Newsletter 124

On 29 September 2020, HMRC published Pension Schemes Newsletter 124. The newsletter announces that certain temporary changes made in light of the coronavirus pandemic will be extended until 31 March 2021. These include those relating to pension scheme returns, transfers to QROPS, BCE1 valuations and other scheme valuations (see 7 Days).

An update on the protected pension age easement which was extended up to 1 November 2020 (see 7 Days) is awaited.

Amongst other reminders and notes on time limits, the newsletter also reminds people that the call for evidence on pensions tax relief administration (see 7 Days) closes on 13 October 2020.

FCA confirms planned consultation on TCFD disclosures

On 2 October 2020, correspondence between the FCA and Guy Opperman about climate-related disclosure requirements was published.

The FCA states that it intends to consult on implementing disclosures in line with TCFD recommendations for asset managers and contract-based pension schemes in the first half of 2021, with new obligations to come into force in 2022. The Government endorsed the proposals. The timeframe is designed to align the FCA’s climate risk reporting requirements with those under the forthcoming Pension Schemes Bill (see our ESG Guide), which is set to receive its second reading on 7 October 2020.

ICO consultation on draft statutory guidance launched

On 1 October 2020, the ICO launched a consultation on draft Statutory guidance “designed to ensure the rights and freedoms of individuals are protected”. The draft guidance details how it will regulate and enforce data protection legislation in the UK, setting out the ICO’s powers, how they are used and how fines are calculated, whilst also seeking to provide assurance to business that it will use its powers “proportionately and consistently”.

The consultation will close at 5pm on 12 November 2020.

PPF publishes levy consultation

On 29 September 2020, the PPF published a consultation on its levy rules for 2021/22.

As the PPF remains in a strong financial position it suggests a reduction in the overall levy collected, and minimal changes for this year. It proposes “two developments for the 2021/22 levy year that better reflect the risk posed to [it] by small schemes, and help with the cost of the levy”:

• the levy for schemes with less than £20 million in liabilities will be halved. This reduction will be tapered (with only schemes with £50 million or more in liabilities charged in full)
• the cap on the amount of levy paid by any individual scheme will be cut from 0.5% of that scheme’s liabilities to 0.25%.

The cost of these changes will not be passed on to other levy payers.

The deadline for responses to the consultation is 5pm on 24 November. The PPF expects to publish its response to this consultation, and its final levy rules for 2021/22, slightly later than usual, in January 2021. The usual date for submission of contingent assets, of 31 March 2021, will still apply.

PPF announces changes to actuarial factors

The PPF has announced changes to the actuarial factors it uses. These are regularly reviewed, “taking into account external influences, such as movements in financial markets and changes to life expectancy”.

The changes will affect members who retire on or after 1 October 2020 who choose to take some of their compensation earlier or later than the applicable pension age, and also those who choose to convert their compensation into a cash lump sum.

Pensioner and FAS members will not be affected. For anyone retiring before 1 October, the old factors will be used.

TPR blogs on climate change

On 1 October 2020, TPR published a blog post by David Fairs, Executive Director of Regulatory Policy, Analysis and Advice.

The blog considers the pension industry’s response to the challenge of climate change, and the actions schemes should be prepared to take when the Pension Schemes Bill becomes law.