The Week In Pensions provides you with a digest of the most important developments in pensions law and regulation along with highlighting some of the most interesting stories from the pensions industry and national press.
In The Week In Pensions this week:
- The Court of Appeal rejects state pension age challenge;
- FCA issues its Financial Services Regulatory Grid;
- TPR confirms consultation on consolidated TKU code;
- Pensions Minister expresses confidence in passing of the Pension Schemes Bill 2019 – 21 by the end of the year;
- TPR confirms contribution payment failure period to return to 90 days in 2021; and
- Regulations to correct defect in PPF creditor rights regulations published.
And, in the pensions industry and national press:
- Fraction of pension scams investigated by police; and
- Pension transfer advice in short supply just as demand for transfers increases.
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Pensions law and regulation update
Court of Appeal rejects state pension age challenge
The case involves the “BackTo60” campaign challenging the equalisation of the state pension age for women from 60 to 65 and the further raising of the state pension age for both men and women from 65 to 66, 67 and 68 (depending on age) on the grounds of direct and indirect age and gender discrimination. The women also argued they had not been given sufficient notice of the planned changes. While expressing sympathy for the women, the Court of Appeal upheld the Divisional Court decision that there had been no discrimination, ruling that the government’s changes equalising and then raising the state pension age was not manifestly without reasonable foundation (in terms of striking the balance between the public purse and hardship to the affected women).
The Court also agreed with the Divisional Court that the government’s publicity campaign over a number of years had been adequate and reasonable notification of the changes if indeed notice was required (which was not established as there was no duty to notify in the legislation and it was not for the courts to introduce notification or consultation requirements not otherwise provided for by Parliament). Although the women had been given an extension of time to bring their case, relief could also still be refused on the ground of undue delay, in any event. BackTo60 is considering an appeal.
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FCA issues Financial Services Regulatory Initiatives Grid
The Financial Conduct Authority (FCA) has joined forces with a variety of regulatory bodies including The Pensions Regulator (TPR) to establish the Financial Services Regulatory Initiatives Forum (Forum) and set out in one place information about their various ongoing regulatory initiatives that may have significant operational impact over a 24 month period.
The Regulatory Initiatives Grid (Grid), first introduced in May, is intended to help organisations plan for change and is updated by the FCA regularly and at least twice a year. There are currently 111 initiatives, some of which are paused and others are long-running.
The Grid is 25 pages long and a useful tool to view initiatives across the regulatory spectrum, from the prospective review by Her Majesty’s Treasury (HMT) of Solvency II and the FCA/HMT initiatives implementing the European Market Infrastructure Regulation (REFIT), to the more familiar initiatives by TPR such as in relation to DB scheme funding.
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The Pensions Regulator to consult on consolidated TKU code by November 2020
Fiona Frobisher, Head of Policy at the Pensions Regulator (TPR), has confirmed that TPR is expected to launch a consultation on the standards of its consolidated trustee knowledge and understanding (TKU) codes by November 2020.
Speaking at the Pensions Age Annual Conference, Frobisher stated that TPR would be seeking views from the pensions industry on how to make the rewritten codes “better and clearer for everybody”, after adding greater governance requirements and focus on environmental, social and governance (ESG) issues. Currently, the TPR has consolidated between 50 to 70 modules into ten codes for easier access.
Pensions Minister expresses confidence in passing of Pension Schemes Bill 2019-21 by end of 2020
The Pensions Minister, Guy Opperman, has stated that he is confident the Pension Schemes Bill 2019-21 will “be in law by the end of the year”. Mr Opperman was speaking at a webinar hosted by the Society of Pension Professionals, where he explained that COVID-19 and Brexit-related matters were of top priority for Parliament.
TPR confirms contribution payment failure period to return to 90 days in 2021
TPR has updated its ‘COVID-19: an update on reporting duties and enforcement activity guidance’ to confirm that, with effect from 1 January 2021, it will require pension scheme providers and trustees to revert to reporting payment failures that are 90 days outstanding, rather than 150 days as is currently provided under an easement.
TPR acknowledges that this reduction in the reporting timetable may have an impact on providers’ systems and processes. Because of this it is providing a three-month period for schemes to make the necessary adjustments. However, the 90-day period will become mandatory from 1 April 2021.
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Regulations to correct defect in PPF creditor rights regulations published
The Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020 (SI 2020/990) have been laid before Parliament on 15 September 2020.
These Regulations correct a “procedural error” that occurred when the earlier Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment) Regulations 2020 (SI 2020/783) were brought into force.
The new regulations came into force on 16 September 2020 and revoke and replace the earlier regulations. The Regulations aim to extend the scope of creditor rights exercisable by the PPF in certain circumstances for purposes of the Corporate Governance and Insolvency Act 2020.
Highlights from the pensions industry and national press
Fraction of pension scams investigated by police
Following a freedom of information request, wealth managers Quilter have found that just 7% of reported pension scams were passed on for police investigation last year. The figures released under the freedom of information request showed that in 2019 nearly 400 pension fraud reports were submitted to Action Fraud, but only 26 were handed to the police. It is unclear how many of these resulted in the police taking any action.
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Pension transfer advice in short supply just as demand for transfers increases
Three years ago, there were roughly 3,000 specialist transfer advisers operating in the UK market. Today, this has shrunk to 1,000. This is creating difficulties for members wishing to transfer safeguarded defined benefits into flexible defined contribution arrangements. Specialist financial advice is required for any such transfers if the transfer value is more than £30,000.
The problem is exacerbated as demand has increased at the same time as the supply of advisers has decreased. Many defined benefit schemes and pensions industry advisers are reporting a material spike in requests from DB members to transfer to flexible DC arrangements. Many in the industry expect this trend to accelerate with increasing numbers of redundancies and higher levels of unemployment as a result of COVID-19 restrictions.
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About the author(s)
Ian is a London-based professional support lawyer (PSL) legal director. Ian is a member of our pensions and combined human resource solutions (CHRS) teams. He works with clients to solve their employment and pensions law issues. Ian maintains a particular focus on 'crossover' issues that benefit from his understanding of both areas of law.
Ian Chapman-Curry
Ian is a London-based professional support lawyer (PSL) legal director. Ian is a member of our pensions and combined human resource solutions (CHRS) teams. He works with clients to solve their employment and pensions law issues. Ian maintains a particular focus on 'crossover' issues that benefit from his understanding of both areas of law.