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
- New Secretary of State for Work and Pensions
- Announcement on reform of RPI
- Law Commission confirms electronic signatures are valid
- FRC publishes annual report for 2018/19
- Schemes commit to Cost Transparency Initiative
- PPF starts increased payments to members subject to compensation cap
- Interim chair of The Pensions Ombudsman announced
Following the resignation of Amber Rudd, on 8 September 2019 Thérèse Coffey was appointed Secretary of State for Work and Pensions.
Thérèse was previously Minister of State at the Department for Environment, Food and Rural Affairs.
She was elected the Conservative MP for Suffolk Coastal in May 2010.
On 4 September 2019, Sajid Javid (the Chancellor of the Exchequer) announced that he is unable to consent to the introduction of the UK Statistics Authority’s (“the UKSA”) proposed change to RPI before February 2025, “given that some or all users of RPI will need substantial time to prepare”.
The UKSA had recommended in March 2019 that RPI should eventually stop being published, but that in the interim, “the shortcomings of the RPI should be addressed by bringing the methods of the CPIH into it.” The UKSA would require Government consent to make any such changes before 2030.
The Government intends to consult publicly on whether this change should be made at a date other than 2030, and if so, at what point between 2025 and 2030. As part of this consultation, the UKSA will consult on technical matters concerning how to implement the alignment of RPI with CPIH (the Consumer Price Index including owner occupiers’ housing costs).
The consultation is currently expected to begin in January 2020, with a response due from the Government and UKSA by the end of the financial year.
On 4 September 2019, the Law Commission published a report on electronic execution of documents. The report addresses the use of electronic documents by commercial parties and consumers, including trust deeds and lasting powers of attorney.
The Law Commission’s key conclusions include:
- an electronic signature is capable in law of being used to execute a document (including a deed) provided that (i) the person signing the document intends to authenticate the document and (ii) any formalities relating to execution of that document are satisfied
- an electronic signature is admissible in evidence in legal proceedings (for example, to prove or disprove the identity of a signatory and/or the signatory’s intention to authenticate the document)
- with specific regard to deeds and their witnessing requirements, a deed must be signed in the physical presence of a witness who attests the signature. This is the case even where both the person executing the deed and the witness are executing / attesting the document using an electronic signature.
While the report confirms that the current law already provides for electronic signatures, the Law Commission suggests that the Government may wish to consider codifying the law on electronic signatures “in order to improve the accessibility of the law”. It also recommends:
- the creation of an industry working group – to consider practical and technical issues around electronic signatures and provide best practice guidance for their use in different types of transactions
- the industry working group should look at solutions to the practical and technical obstacles that exist to video witnessing of electronic signatures on deeds. Following this work, the Government should consider legislative reform to allow for this
- a future review of the law of deeds – to consider broad issues about the effectiveness of deeds and whether the concept remains fit for purpose, and specific issues which have been raised by stakeholders. The review should include deeds executed on paper and electronically.
On 6 September 2019, the FRC published its annual report which sets out its progress against commitments to tackle poor-quality audit work, boost enforcement resourcing and improve the quality of reporting.
Key highlights for 2018/19 include:
- increasing Enforcement resourcing by 25%
- rolling out a revised UK Corporate Governance Code and consulting on an overhaul of the UK Stewardship Code; and
- establishing the Investor Advisory Panel to complement the FRC’s existing stakeholder outreach activities with investors.
On 5 September 2019, the PLSA announced that ten of the UK’s largest pension schemes have written a joint letter publicly endorsing the Cost Transparency Initiative (“the CTI”).
The CTI is an independent group, which was launched in November 2018 with the aim of improving cost transparency for institutional investors. In May 2019 it published templates and tools for institutional investors, such as pension schemes, to use to receive standardised cost and charges information from asset managers (see 7days). The standards are also intended to enable trustees to make clear costs and charges comparisons across their different investment management suppliers and asset classes.
In April 2019, the PPF confirmed that it had started to pay increased benefits to PPF and FAS pensioners who were most affected by the CJEU’s ruling in Hampshire v the Board of the PPF because they had had their benefits adjusted by the long service cap.
On 2 September 2019, the PPF announced that it has now started to make increased payments to the first group of pensioners whose benefits were reduced to below 50% of the value of their accrued pension (as a result of just the compensation cap being applied), with a second group to follow in the coming weeks (PPF and FAS members receive their payments at different points in the month).
The PPF also confirmed that it will not yet pay arrears (including tax-free cash) on these increases because there are ongoing court proceedings about the way is the PPF calculates increases. There is currently no date for the court hearing
TPO has appointed Caroline Rookes as its interim chair. The newly-created position is intended to help TPO’s board to strengthen its governance to better reflect the organisation’s transformation, both in terms of size and the complexity of its work, as recommended by the DWP’s tailored review (see 7days).
Ms Rookes was Chief Executive of MAS until 2017, overseeing a period of organisational transformation. Prior to that she was Director of Private Pensions at the DWP, and a non-executive trustee for the NEST Corporation.