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
- Government launches Green Finance Strategy
- HMRC publishes guidance on reclaiming tax relief for members with relief at source
- HMRC publishes Countdown Bulletin 46
- Guide to the treatment of pensions on divorce
- PASA launches DB transfers guidance
- PPF Annual Report and Accounts 2018/19 published
- TPR consults on future of trusteeship and governance
- TPR publishes blog: “Why we’re pushing pension schemes out of the market”
- Written statement: Walker v Innospec Supreme Court Judgment and Response to the Survivor Benefits Review
On 2 July 2019, BEIS published the Government’s Green Finance Strategy, “Transforming finance for a greener future”, in response to the Green Finance Taskforce’s March 2018 report. The strategy aims to:
- ensure that current and future financial risks and opportunities from climate and environmental factors are integrated into mainstream financial decision-making, and that markets for green financial products are robust (referred to as “greening finance”). It includes a Government expectation that all listed companies and large asset owners will disclose in line with the Financial Stability Board’s task force on climate-related financial disclosures (“TCFD”) recommendations by 2022
- develop TCFD guidance for pension schemes. The Government has worked with TPR to establish an industry group to work on this and expects to consult on a draft in late 2019
- accelerate finance to support the delivery of the UK’s carbon targets and clean growth, resilience and environmental ambitions, and international objectives (referred to as “financing green”)
- ensure that UK financial services capture the domestic and international commercial opportunities arising from “greening finance”, such as climate-related data and analytics, and from “financing green”, such as new green financial products and services.
The FCA, PRA, TPR and the FRC issued a joint declaration welcoming the publication of the Government’s Green Finance Strategy and setting out their shared understanding of the financial risks and opportunities of climate change.
On 5 July 2019, HMRC published guidance for pension scheme members which explains how relief at source works and provides information on how to claim further tax relief.
On 2 July 2019, HMRC issued Countdown Bulletin 46. It includes information on:
- the Scheme Financial Reconciliation deadline. Schemes have until close of business on 19 July 2019 to engage or re-engage with HMRC on their figures
- Scheme Financial Allocations
- problems accessing Shared Workspace.
The Pensions Advisory Group has published its “essential guide to the treatment of pensions on divorce”. The guide is aimed at family judges, lawyers and pension experts and is intended to encourage fairer settlements and help manage liability.
The guidance has three key aims:
- to improve the overall member experience through faster, safer transfers
- to improve efficiency for administrators
- to improve communications and transparency in the processing of transfers.
On 4 July 2019, the PPF published its annual report and accounts, which state, among other matters, that:
- the PPF’s reserves, which it holds to fund future claims, decreased from £6.7 billion to £6.1 billion as a result of the liabilities brought by the Kodak Pension Plan No.2, the largest claim on the PPF to date. However, it remains on course to reach its funding objective, with “an 89 per cent probability of success”
- despite significant market volatility, the PPF’s investment return in the year to 31 March 2019 was 5.2 per cent and its assets under management grew from £30 billion to £32 billion.
On 2 July 2019, TPR published a consultation on the future of trusteeship and governance. The document outlines the problem of badly run pension schemes and considers how the trustee model can be made more effective.
Questions posed to the pensions industry include:
- whether there should be an accredited professional trustee on every board
- if sole trustees on a pensions board are able to run pension schemes appropriately
- how barriers to consolidation can be removed
- whether a legal requirement should be introduced for trustees to meet minimum standards of knowledge and understanding and ongoing learning
- how diversity on pension scheme boards can be improved.
The consultation, to which we will be responding, closes on 24 September 2019.
On 2 July 2019, TPR published its latest blog which explains that improving governance is a key driver for its desire to accelerate the consolidation of pension schemes. In particular, it poses questions to the industry about how to improve and evidence trustee knowledge and understanding, how to encourage diversity on boards, the role of accreditation and whether sole trustees are able to govern effectively.
Written statement: Walker v Innospec Supreme Court Judgment and Response to the Survivor Benefits Review
On 4 July 2019, Guy Opperman MP, the Parliamentary Under Secretary of State for Pensions and Financial Inclusion made a written statement in Parliament on the Supreme Court judgement in Walker v Innospec and on the Government’s response to the review of the differences in survivor benefits in occupational pension schemes (“the Review”). The statement makes the following key points:
- it is now clear that same sex civil partners or spouses are entitled to survivor benefits in the same way as opposite sex spouses
- the Government has decided that in public service schemes, surviving male same-sex and female same-sex spouses and civil partners will, in the majority of cases, receive benefits equivalent to those received by widows of opposite sex marriages. The exception to this may be in specific schemes where, in the past, improvements in female members’ survivor benefits have led to increased contributions. Departments will consult on and take forward changes as soon as possible. Schemes will notify their members of changes and any actions they need to take
- private sector schemes are individually responsible for ensuring that they are compliant with the judgment. These schemes will need to take their own advice to ensure that they are legally compliant with the judgment going forward
- following careful consideration of the Review’s findings, the Government has concluded that, aside from those changes brought about by the Supreme Court judgment, it will not make any further retrospective changes to the existing provisions in respect of occupational pension schemes to equalise survivor benefits. While this means that the differences in survivor benefits for accruals in past periods will remain for some, these will work their way out of the system in time.