Welcome to our monthly update on current legal issues for trustees of DB and hybrid pension schemes, which will help you stay up to date on important developments between trustee meetings and support the legal update point on your next trustee agenda. We also have a separate DC-only briefing.
Climate change related obligations (updated)
Starting October 1, 2021, new climate change-related obligations will come into effect, including: Trustee knowledge and understanding requirements; Governance, strategy and risk management activities; and reporting requirements. Visit our new information platform: Sustainability and UK Pension Systems: Preparing for the New TCFD Requirements.
The obligations will be phased in, starting with the largest pension schemes (with assets over £ 5 billion) and master trusts. Programs with assets in excess of a billion pounds are due to follow a year later.
Read the regulations (here and here) and the legal notices. The Pensions Regulator (TPR) will confirm its regulatory approach: Read more.
ACTION: Ensure that the trustees are trained on the new responsibilities and that appropriate action is taken before the date applicable to your system.
Reminder: Changes to TPR Powers (New)
On October 1, 2021, new TPR regulatory powers and sanctions will come into effect, including the new “headline” offenses. TPR is expected to publish guidance on its new powers soon, including the new offenses.
ACTION: Read the instructions and plan the training. If necessary, seek legal advice.
Changes to DC reporting (updated)
According to the regulations, which are to be published shortly, trustees of “relevant systems” (systems that offer cash purchase advantages, unless these are only AVC) must publish the net investment returns from DC default and self-selected funds in the chair’s statement. This applies to the first system year ending after October 1, 2021: Read the draft regulation.
Systems with assets less than £ 100m that have been in operation for at least three years are required to produce a specific DC score to evaluate members, measured against three benchmarks, and report whether or not the system is of good value. This applies to the first system year ending after December 31, 2021.
Legal guidelines have been published to assist trustees with these new requirements: Read the guidelines. The legal guidelines on reporting costs and fees have been updated to reflect changes in relation to the smoothing of performance fees and to clarify points about the figures used in the Chair’s position paper: Read the guidelines.
ACTION: Review the changes and implement appropriate changes to processes and information flows to meet the new requirements.
Pension fraud (updated)
TPR has asked the systems to be vigilant and report suspected fraud. Corresponding changes to the legal broadcasting rights are expected shortly (the Industry Code of Conduct on Fraud will also be updated to reflect the changes).
ACTION: Keep abreast of fraud risks and upcoming changes in industry broadcast rights and fraud code. Make sure processes are in place to review schema practices against the changes and update them promptly if necessary.
PPF surcharge: Covid-19 extension (new)
The pension insurance fund can waive interest on arrears in the event of late payment of allocation invoices in the event of difficulties due to Covid-19, subject to a successful application and confirmation of the additional payment.
ACTION: If necessary, consider with the system support organization whether an application should be made.
The Money and Pensions Service now offers access to Pension Advisory and Pension Wise through its new MoneyHelper website; The old contact details are currently unchanged.
ACTION: Review the membership brochure, program website, and other communications, and update signage information as necessary.
Say your opinion
- The government is discussing proposed rules to expand the reportable event regime, including new obligations for employers, TPR and trustees to provide information on some planned transactions / events (the obligations are expected to apply from April 2022). The consultation ends on October 27, 2021. Read more.
- TPR and the Financial Conduct Authority have published a discussion paper on the value for money of DC pensions, which proposes a common framework for the disclosure of information about investment performance; System supervision; as well as costs and fees. The deadline for comments is December 10, 2021. Read More
Watch this room
- The Pensions Dashboards Program is expected to provide more information on the dashboard rollout in the winter: Visit the information hub for pension plans. PASA has also published guidelines for preparing dashboards. Onboarding is expected from 2022 (voluntary) and 2023 (mandatory).
- The government plans to implement its “stronger push” on pension policies; Draft regulations indicate that this can be introduced from April 2022: read more.
- The government has consulted on changes to the allowable fees in standard agreements in DC systems used for auto-registration: Read More
- Watch our webinar on TPR’s proposed Uniform Code of Conduct. Read TPR’s interim answer.
- Consultations on new DB funding regulations and the TPR draft code are expected this year: read more.
- The government has advised on a stronger consolidation of the DC market: Read more.
- In the first half of 2022, regulations are now expected to replace the current regime on strategic goals for investment advisory providers and competitive tenders for fiduciary administration services.
- The government is considering solutions for the proliferation of small, deferred DC pension pots: Read More
- A new industry code (from PASA) on wire transfers is expected this year.
- The government has discussed proposed regulations for collective DC systems: Read more.
Do you need help with a pension dispute? Visit allenovery.com/pensionsindispute.
Do you need help managing DB pension risk? Visit allenovery.com/pensionrisk.