Pensions UK: What's new this week - 26 April 2021
26 April 2021
Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of occupational pensions.
This week we cover topics including: a blog post by the Pensions Regulator on the new criminal offences; and a Treasury Committee report on Net Zero and the Future of Green Finance.
The Pensions Regulator (TPR) has published a blog post discussing its approach to the new criminal offences under the Pension Schemes Act 2021, aiming to provide reassurance that TPR will not ‘overstretch the intent and purpose behind the powers’. TPR highlights that both offences (avoidance of employer debt and materially reducing the likelihood that members will receive their accrued benefits) require three elements: intent, an act (or omission) and the absence of a reasonable excuse. It notes that ‘We are not in the business of making the lives of competent and responsible trustees, advisers or employers, or anyone operating in this space, harder.’
TPR states that it ‘will not be targeting acts pre-dating the offences coming into force’ – this is an issue of some concern to a range of parties where a DB scheme is involved, for example in a corporate transaction or restructuring. The offences (due to go live in autumn 2021) are not retrospective, but TPR’s draft policy states that evidence of prior acts/omissions ‘may be relevant to our investigation/prosecution of actions after that date, for example if it indicates someone’s intention’. As a result, parties are already taking steps to ensure that relevant decision-making processes and reasons are appropriately recorded.
We have submitted a detailed response to the consultation and will report on the final policy in due course.
A report by the House of Commons Treasury Committee has made recommendations that could herald an increased policy focus in future on how trustees incorporate environmental, social and governance considerations into investment decisions in relation to default funds.
The report notes that ‘The Treasury has been robust in its view that default funds should not be required to move to more green alternatives, but at the same time maintains that consumers should not have to switch out of the default fund to invest sustainably. The Government should resolve this apparent contradiction.’ It recommends regular reports on the proportion of DC members whose savings are invested in default funds (currently estimated at 96%), and the extent to which those default funds are aligned with a path to Net Zero. The report also flags concern that the draft regulations on climate change governance and reporting requirements, made under the Pension Schemes Act 2021, exclude schemes with less than £1 billion in assets.
We are delighted to invite you to be part of an audience of trustees and advisers for a debate that cuts to the heart of the complex topic of applying GMP equalisation to historic transfers-out. Does the Lloyds ruling require trustees to do it? Are they liable if they don’t? Is it practically feasible? Is it economically viable?
You’ll hear our experts debate both sides of the argument and have the chance to put your own questions to our speakers before casting your vote – join us at 5.30pm on Thursday 29 April for an entertaining and insightful event under the ‘Chatham House’ rule. If you would like to submit any questions ahead of time, then you will find an option to do that on the RSVP form.
Please click here for more information and to register.
Our next Pensions Academy sessions will take place online from 9.30am to 10.30am on the following dates:
Monday 10 May – Governance: new Code, new practices
TPR is consulting on a ‘single Code of Practice’ which should eventually consolidate existing Codes and guidance. But the draft Code doesn’t just consolidate – it adds or increases new regulatory expectations in some areas, and it deals with entirely new requirements, including the formalisation of a risk management function for each pension scheme, and the requirement to perform regular ‘own-risk assessments’. We’ll guide you through the changes and help you prepare for the new requirements.
Wednesday 12 May – Pension scheme investing: the sustainability revolution
Pension scheme investment decisions have been an area of increasing regulatory focus in recent years, but the TCFD-style reporting requirements that are due to affect some schemes from 1 October 2021 are probably the most significant change yet. Experts from our investment team will guide you through the changes they are seeing in this area of increasing public interest and political attention.
Friday 14 May – Legal update: what’s now and what’s next?
It’s already been a busy year for consultations and new developments but there’s much more to come as the government and regulators work through their 2020 backlog. Members of our Pensions team will update you on the current state of play and what’s on the horizon to shape your future agenda.
Please click here to register for any of these webinars.