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

Coronavirus – Sackers response

At Sackers we are committed to ensuring that the Coronavirus outbreak causes minimal disruption for our clients, and have taken several steps to ensure it is ‘business as usual’. For details of these steps, as well as key points for trustees and employers to consider in light of the outbreak (which we will continue to update), please see the dedicated section of our website, or talk to your usual Sackers contact.

Update on CMA Order timing requirements

On 2 June 2020, the CMA updated its guidance on the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 (“the Order”), to include details on the process and timing for compliance statements under that Order. The Order implements a package of requirements put into place following the CMA’s investigation, which found that certain features of the markets for investment consultancy and fiduciary management services adversely affect competition in connection with the supply and acquisition of those services to and by pension schemes (see 7 Days).

The updated guidance sets out timing requirements in respect of different parts of the Order:

  • for Part 6 (fiduciary management services – performance information provision requirements), fiduciary management providers must submit a compliance statement by 8 July 2020
  • for Parts 3, 4, 5, 7 and 8, pension scheme trustees (amongst others) must submit a compliance statement to the CMA by 7 January 2021.

DWP regulations, which were designed to integrate the Order into pensions law and to transfer responsibility for enforcement from the CMA to TPR, were due to come into force on 6 April 2020. However, their publication has been delayed due to COVID-19. Until they come into force, the Order continues to apply, meaning that trustees need to report any non-compliance to the CMA.

Please see our recent Alert for further detail on investment disclosure and governance requirements, including the Order.

DB pension transfers: FCA publishes policy statement, guidance consultation and update on work

On 5 June 2020, the FCA published a package of measures designed to address weaknesses in the DB transfer market (following its 2019 consultation). It includes steps to reduce conflicts of interest by banning contingent charging (where a financial adviser only gets paid if a transfer goes ahead), as well as “help for advisers who want to do the right thing and provide good quality advice to their customers”. The package also includes support for consumers who are considering whether to transfer out of a DB scheme, or who have transferred out.

Policy statement PS20/6 sets out the FCA’s proposals, and final rules and guidance, on pension transfer advice, particularly focused on DB to DC transfers.

To address ongoing conflicts, advisers must now consider an available workplace pension as a receiving scheme for a transfer and, if they recommend an alternative solution, demonstrate why that alternative is more suitable.

Advisers will also now be allowed to provide an abridged advice process which will help consumers access initial advice at a more affordable cost. The abridged process can only result in a recommendation not to transfer or a statement that it is unclear whether a consumer would benefit from a pension transfer without giving full advice.

The changes generally come into force on 1 October 2020, with the exception of changes to triage services and to use estimated transfer values (which come into force on 15 June 2020).

In addition, the FCA has published a Guidance Consultation on advising on pension transfers. This sets out the FCA’s expectations of how firms should apply current Handbook rules and guidance when giving DB transfer advice (as well as the new rules), through best practice and case study examples of suitable and unsuitable advice. The deadline for comments is 4 September 2020.

Finally, the FCA has also published an update on its supervisory work on pension transfers, which sets out its next steps. It gives an update on its work in relation to the British Steel Pension Scheme, noting that it intends to write to all former members who transferred out to “help them revisit the advice they received, and to complain if they have concerns”.

FOS annual complaints data for 2019/20

On 3 June 2020, FOS published its annual complaints data for 2019/20, together with analysis of that data. In relation to pensions, SIPPs remained the most complained about product (2,606 new complaints), with complaints including disputes over due diligence. The FOS also continued to see complaints relating to issues with investment platforms and portfolio management.

COVID-19-related complaints had already reached the FOS by the end of March 2020, and it expects to see more complaints of this kind throughout the year.

On the same date, the FOS also published its future strategy, which will run to 2025. The document, entitled “Contributing to a fairer financial world“, outlines the FOS’ strategic priorities for the next five years.

Updates on extended furlough scheme

On 5 June 2020, the Government published updates to its guidance suite on the extended Coronavirus Job Retention Scheme (“CJRS”).

The guidance clarifies that, from 30 June, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June. The final date by which an employer needs to agree with their employee, and ensure that they place them on furlough, is therefore 10 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Various pieces of HMRC guidance have been updated to reflect this.

Further guidance, on “flexible furloughing and how employers should calculate claims”, is due to be published on 12 June.

Protected pension age re-employment easement extended

HMRC updated its pension schemes newsletter 119 (originally published on 30 April 2020 – see 7 Days) on 2 June 2020.  The update notes that the easement which allows workers to be re-employed to help with the Coronavirus outbreak without losing their protected pension ages is now extended, to 1 November 2020.

COVID-19: Guidance on pension scheme financial reports and audit

New joint guidance on pension scheme reports, financial statements and related matters in the context of the COVID-19 pandemic was published on 2 June 2020 by the ICAEW, the Institute of Chartered Accounts of Scotland (ICAS) and the Pensions Research Accountants Group (PRAG).

The guidance “is intended to support pension scheme auditors navigate the additional challenges they are likely to experience as a result of the COVID-19 pandemic”. It covers a range of topics, including:

  • responsibilities for reporting to TPR
  • the impact of the COVID-19 pandemic on the control environment of pension schemes
  • trustees’ reports and chair’s statements
  • consideration of “going concern”, and the trustees’ assessment of going concern
  • accounting for scheme investments
  • events after the end of the reporting period
  • audit issues, including sufficiency and documenting of evidence
  • the auditor’s statement on contributions.

The guidance should be read alongside existing standards and guidance, as well as any COVID-19-related updates from the FRC and TPR.