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

TPR updates guidance on timing of stronger nudge

TPR updated its communicating and reporting guidance on 31 May 2022 to say that, where an application to transfer flexible benefits was already being processed before 1 June 2022, the new stronger nudge requirements (see our Alert) do not apply to that application or to communications related to that application. While this update is helpful in showing how TPR interprets the requirements, the underlying legislation still requires trustees to apply the stronger nudge in relation to applications, or communications in relation to applications, received on or after 1 June 2022.

DWP responds to consultation on trustee oversight of investment consultants and fiduciary managers

On 6 June 2022, the DWP published its response to the 2019 consultation on draft regulations intended to integrate the CMA Order 2019 (the “Order”) into pensions law. The Order requires trustees, subject to limited exceptions, to carry out a tender process for fiduciary management services and set objectives for their investment consultants (see our Alert for more detail). The draft regulations largely replicate the Order into pensions legislation and allow TPR to oversee the requirements rather than the CMA. Trustees will be required to report compliance to TPR via the scheme return process.

Following consultation, the DWP have proposed some minor changes to the draft regulations. These include changes to the definitions of “investment consultancy services” and “fiduciary management services”, and to clarify which assets should be excluded from scheme assets for the purposes of identifying when the requirements apply.

We are still awaiting the final regulations, which the DWP anticipates will come into force on 1 October 2022. TPR will provide guidance on the penalties that apply for non-compliance once the regulations are made.

For more information, see our forthcoming Alert.

BEIS response to consultation on reforms to the audit and corporate governance regime

On 31 May 2022, BEIS published a response to its consultation on proposals to “restore trust in audit and corporate governance”. The response includes commitments to a broad range of measures, including the replacement of the FRC with a new regulator – the Audit, Reporting and Governance Authority (“ARGA”). The Government intends to legislate to give ARGA statutory powers to, amongst other things, oversee and regulate the actuarial profession and to have a stronger role in auditor registration. No timescale has been given for implementation of these reforms.

The response also confirms that the FRC, working with the FCA, DWP and TPR, will review the regulatory framework for effective stewardship, including the operation of the Stewardship Code, which took effect on 1 January 2020. The review will assess whether the Stewardship Code is creating a market for effective stewardship and whether there is a need for any further regulation in this area. BEIS anticipates the review will take place in 2023, to allow two full years of reporting under the Stewardship Code.

HMRC publishes guidance on increase to NMPA

HMRC made various updates to the PTM on 31 May 2022 to reflect the increase in NMPA to 57 on 6 April 2028, and the circumstances where members may have a protected pension age between 55 and 57 (see our Briefing for more detail).

HMRC pension schemes newsletter 139

HMRC published its latest pension schemes newsletter on 31 May 2022, reminding schemes that the deadline for submitting the 2021 to 2022 annual return of information to HMRC is 5 July 2022. The newsletter also contains articles on the digitisation of relief at source, which HMRC aims to carry out by April 2025, and updates on migrating schemes and annuity contracts to the managing pension schemes service.

PLSA made simple guide on Defined Benefit De-risking

The PLSA has published a guide to defined benefit de-risking in its “made simple” series. The guide is designed to provide an overview of de-risking strategies to help trustees identify appropriate options for their schemes.