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

Pensions cold-calling ban to come into force

Regulations providing for a ban on cold-calling in relation to pension schemes were finally approved by the House of Commons in December 2018. The Electronic Communications (Amendment) (No. 2) Regulations 2018 were made on 19 December and will come into force on 9 January 2019.

The Government introduced amendments to the Financial Guidance and Claims Act 2018, which received royal assent in May 2018, to make provision against cold-calling in relation to pension schemes. However, implementation of the ban was pushed back while HMT consulted further.

The regulations restrict firms from making unsolicited direct marketing calls to individuals regarding pension schemes. Two exemptions apply: where the individual being called has given their consent to the caller to receive direct pensions marketing calls; or where they have an existing client relationship with the caller, such that they would reasonably envisage receiving direct pensions marketing calls. The exemptions only apply where the caller is authorised by the FCA, or is the trustee or manager of an occupational pension scheme or a personal pension scheme.

Audit reform proposals – CMA, Brydon and Kingman reviews

On 18 December 2018, BEIS announced an independent review into the quality and effectiveness of the UK audit market, as part of the Government’s wider package of corporate governance reforms.

The “Brydon Review into UK Audit Standards” will build on the CMA’s market study into the effectiveness of competition in the audit market, and the findings of the Kingman review of the FRC (see below). The review will “consider audits as a product and what the future, standards and requirements should be for audits in the future”.

Detailed Terms of Reference and a project plan are due to be published shortly.

On the same date, Sir John Kingman’s independent review of the FRC recommended that the body (which regulates auditors, accountants and actuaries in the UK) be replaced with an independent statutory regulator, accountable to Parliament. It is proposed that the new regulator, “with a new mandate, new clarity of mission, new leadership and new powers”, would be called the Audit, Reporting and Governance Authority.

Finally, also on 18 December 2018, the CMA published an update paper on its market study into competition in the statutory audit market, which it launched in October 2018.

The paper outlines “serious competition concerns”, and proposes changes to legislation “to improve the audit sector for the benefit of savers and investors”.

The remedies proposed, in the form of recommendations to Government for legislative reforms, include the separation of audit from non-audit (ie consultancy) activities, regulatory measures to substantially increase the accountability of those chairing audit committees, and imposing a “joint audit” regime on FTSE 350 firms, requiring their audits to be carried out by at least two firms, one of which should be outside the “Big Four”.

The CMA welcomes comments, on the issues identified and remedies proposed, by 21 January 2019.

DWP releases consultation in relation to TPO

On 19 December 2018, the DWP launched a consultation onThe Pensions Ombudsman: dispute resolution provisions and widening of jurisdiction”.

The consultation puts forward measures to:

  • make new provision for dispute resolution by TPO, in particular a function for the early resolution of disputes before a determination
  • allow an employer to make a complaint or refer a dispute to TPO on behalf of itself where it chooses a group personal pension arrangement for its employees, and
  • make provision in relation to associated signposting provisions.

This follows the move in early 2018 of TPAS’ dispute resolution function to TPO, forming an “Early Resolution Service”.

The consultation notes that many of the proposals would require primary legislation, and that the Government “will seek to legislate in due course when parliamentary time allows”.

The consultation closes on 18 January 2019.

DWP publishes plans for retirement saving trials for the self-employed

On 18 December 2018, the DWP published a report outlining plans for “research and trials that will help build evidence to find ways to help self-employed people save for retirement”.

The report follows the Automatic enrolment review 2017. In the review, the Government had announced it would carry out trials on a number of different approaches to help self-employed people save for retirement.

The report now sets out plans for carrying out these trials, and invites organisations from a range of sectors, including invoicing software providers and accounting organisations, to work with the DWP to co-design and test targeted savings interventions.

Government publishes no-deal Brexit pensions guidance

The DWP published two sets of guidance on 18 December 2018, explaining the rights of EU citizens in the UK, and of UK nationals in the EU, to benefits and pensions in the event of a no-deal Brexit.

HMRC publishes Countdown Bulletin issue 40

On 19 December 2018, HMRC published issue 40 of its “Countdown Bulletin”, which provides information for schemes following the ending of DB contracting-out.

The latest edition of the bulletin includes:

  • a Scheme Financial Reconciliation update, and the implications for schemes that do not request details of their financial position from HMRC
  • the extended deadline for scheme cessation and stalemate queries (to 9 January 2019, from 31 December 2018) due to recent access issues experienced by some schemes with HMRC’s Shared Workspace
  • information on Scheme Reconciliation Service queries
  • guidance on Contributions Equivalent Premiums after 5 April 2016.

HMRC publishes guidance on members’ contracted-out rights

On 19 December 2018, HMRC published guidance entitled ‘Transfer your scheme member’s contracted-out pension rights’, which explains the types of schemes to which GMP and post 1997 COSR rights can be transferred, and surrounding issues on transfers.

On the same date, HMRC published two further sets of guidance, ‘How to calculate your scheme member’s Guaranteed Minimum Pension’, which includes sample calculations, and ‘Provide a pension for your scheme member’, which explains how to provide the minimum level of pension that must be paid, depending on accrued benefits, and according to anti-franking legislation.

Government response to LGPS consultation published

MHCLG has published the Government’s response to its consultation on technical amendments to benefits in the LGPS.

The amendments have been proposed in response to recent legal judgments concerning survivors’ benefits (including Walker v Innospec, and Brewster), to meet existing policy objectives, and to give some flexibility to respond to future developments.

MHCLG sets out how the Government plans to take forward each of the matters covered in the consultation. The amendments will be made through the Local Government Pension Scheme (Miscellaneous Amendment) Regulations 2018 which were laid before Parliament on 18 December.

The Regulations will largely come into force on 10 January 2019. The changes to reflect Walker will take effect retrospectively from the date civil partnerships and same-sex marriages were permitted (5 December 2005, and 13 March 2014, respectively). A technical amendment to the LGPS 1995 Scheme (allowing early access to deferred pension benefits) will take effect retrospectively from 17 April 2018.

PPF publishes further update on post-Hampshire approach

On 21 December 2018, the PPF published an update to its plans for implementing the effects of the ruling by the CJEU in the case of Grenville Hampshire v the Board of the Pension Protection Fund (September 2018).

The PPF had published a high level explanation in November 2018 of the interim approach it was taking to ensure that PPF and FAS compensation is paid in line with the judgment.

The update confirms the PPF is “continuing to work on its methodology for calculating increases for PPF pensioners”. It will then confirm its approach for other categories of member. Methodology statements will be published, to include how the PPF will handle any missing data, and future inflation and mortality assumptions. The stated approach will remain on an interim basis until new legislation comes into force, or there are further rulings by the courts.

The PPF believes that “the vast majority of members receive considerably more than 50% of the value of their original scheme benefits” and its approach is to prioritise those who are affected most (ie by the long service cap) first. It hopes to conclude payments for this category by the end of April 2019, providing it has received all necessary information.

Further information will be published by the PPF “in due course”.

PPF launches DB SME forum

The PPF has announced the launch of a forum for small and medium enterprise (“SME”) employers with DB schemes, with the aim of improving communication with the PPF, and giving “space to shape policy and make sure the needs of SME schemes are heard and addressed”. The first meeting is “likely to take place” in February 2019.

David Taylor, Executive Director and General Counsel at the PPF, said that although the PPF provides “good quality service to our levy payers, it is rather generic and needs to consider better the different needs of our customer groups…This forum will not only help us to respond to this and improve our performance, but will also give SMEs the space to express their views directly to us, with confidence that those views are being heard and their feedback taken into account.” Interested schemes should contact the PPF.

Single Financial Guidance Body officially launches

The Single Financial Guidance Body (“SFGB”), has now officially adopted its delivery functions, having become a legal entity in October 2018. The SFGB consolidates the former services of the Money Advice Service, TPAS and Pension Wise.

Its website confirms that, as 2019 progresses, a new name will be sought for the SFGB. A new outreach strategy will also be developed, which will include a new integrated service offer and enhanced partnership, working with the wider industry, employers and key stakeholders.

TPR appoints Charles Counsell as new Chief Executive

On 18 December 2018, TPR announced the appointment of Charles Counsell as its new Chief Executive. He will join TPR at the start of April 2019, following the departure of Lesley Titcomb at the conclusion of her term as Chief Executive at the end of February.

Mr Counsell is currently Chief Executive of the Money Advice Service, and was previously Executive Director of Automatic Enrolment at TPR.

The Lord Chancellor and Secretary of State and another v McCloud and Mostyn and others and Sargeant v London Fire and Emergency Planning Authority and others – Court of Appeal, 20 December 2018

The Court of Appeal has held that the transitional provisions which were put in place as part of reforms to both the Judicial and Firefighters’ Pension Schemes constitute unlawful direct age discrimination.

Please see our case report for further detail.

Williams v The Trustees of Swansea University Pension & Assurance Scheme and another – December 2018

The Supreme Court has upheld the Court of Appeal’s judgment, in a case that had considered for the first time what it means to be treated “unfavourably” under section 15 of the Equality Act 2010.

Please see our case report for further detail.