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Pensions UK: what’s new this week 29 March 2021

This week we cover topics including: a call for evidence on trustee consideration of social factors; the Pensions Regulator’s new settlement policy; pension scams; and new data management plan guidance from PASA. 

Call for evidence on consideration of social factors

The government has published a call for evidence seeking input on trustees’ policies and practices in relation to the consideration of social factors (such as modern slavery, consumer protection and community engagement) and how they integrate considerations of financially material social factors into investment and stewardship activities. This includes whether schemes have a policy on financially material social factors, and whether schemes have a stewardship and/or voting policy that specifies social factors. The call for evidence may or may not lead to proposed changes in policy; any changes in policy would be subject to public consultation.

The call for evidence follows legal changes to requirements for statements of investment principles (SIP), and a review of SIPs for some large DB schemes and large DC master trusts. The review found that most of these SIPs had a dedicated ESG section, and the majority acknowledged that ESG considerations may have a material impact on investment risk and return, but that the majority of the SIPs did not differentiate between E, S and G factors, and policies or objectives to address social factors were in the minority. Some SIPs (a minority) expanded on the social factors and had specific areas of focus – common themes included gender diversity, labour standards and controversial weapons (but the call for evidence noted that the rationale for focusing on specific social factors was limited).

The call for evidence closes on 16 June 2021.

Read the call for evidence.

TPR publishes settlement policy

The Pensions Regulator (TPR) has published a policy on its approach to negotiating and concluding settlements of its regulatory or civil enforcement action, which is to be read in conjunction with existing published procedures for TPR’s Case Team and the Determinations Panel. 

This policy is for employers, trustees or anyone else who is a target of, or directly affected by, TPR’s regulatory or civil enforcement action. It does not apply in a number of circumstances, including criminal proceedings and applications to TPR (eg for clearance or regulated apportionment arrangements). Although it sets out TPR’s general approach to settling proposed or ongoing enforcement action, TPR may depart from the policy if it considers this appropriate.

TPR’s aim for a settlement is that it should offer a fair and appropriate outcome having regard to the specific circumstances and TPR’s statutory objectives. The policy sets out a number of factors that TPR is likely to consider when deciding whether or not to settle a particular matter, as well as examples of settlement options. 

Read the policy.

TPR urges schemes to report scams, sign scams pledge

TPR is continuing its campaign against pension scams, publishing a new press release urging schemes to be on high alert for criminal or suspicious activity and to sign up to its pledge to help combat pension scams (which includes a commitment to report scams). 

Read the press release.

Read about the pledge.

PASA: new data management plan guidance

PASA has published new guidance on data management plans (DMPs), which are used to formalise the approach to managing and improving scheme data. The guidance notes that a DMP should not be considered as a one-off exercise, but as an ongoing part of scheme governance. This may be a helpful resource in connection with the regular assessment of a scheme’s data quality, and as part of preparing for the rollout of pensions dashboards. 

Read the guidance.

TPR regulatory report: prosecution of trustee director

TPR has published a regulatory intervention report in relation to the investigation and prosecution of a pension scheme trustee director, who was investigated by TPR following a whistleblowing report. The Insolvency Service was conducting a parallel investigation, and copies of trustee minutes obtained during its investigation indicated that the director had made loans from the scheme to himself and associated businesses.

TPR planned to ask the Determinations Panel to prohibit the individual from trusteeship, but did not pursue this after he entered into an undertaking for disqualification as a company director. However, he was prosecuted for fraud and for making prohibited employer-related investments and was sentenced to over three years in prison. TPR also sought a confiscation order under the Proceeds of Crime Act, with over £233,000 to be paid to the scheme.  

The report emphasises that trustees must meet the highest standards of integrity, and that TPR will bring the full force of the law against trustees who dishonestly abuse their position against the interests of savers and for their own benefit. It also confirms TPR’s commitment to working with other regulators and law enforcement partners. 

Read the report.

Tax day: pensions-related announcements

No significant review of pensions tax relief was announced in the government’s ‘Tax Day’ package of tax-related consultations, calls for evidence and policy announcements. However, the government did announce some measures relevant to pensions including:

  • The government will review the appropriate taxation framework for superfunds alongside the development of the regulatory regime; it should not be assumed that the currently applicable tax regime will remain unchanged.
  • The government is planning to make some technical updates to pensions tax rules connected to issues identified as part of the McCloud exercise in public sector schemes (eg scheme pays).
  • The expansion of the Dormant Assets Scheme will be covered in a future Finance Bill. The government announced plans to expand the Scheme earlier this year: read more.
  • The government will keep issues relating to the taxation of trusts under review, but did not announce any significant changes. 

Read the policy paper.

Liability for wrongful trading: further extension of temporary ‘suspension’

The government is extending temporary relief for directors in relation to liability for wrongful trading – the current easement expires at the end of April; new regulations extend this to 30 June 2021. The regulations came into force on 26 March 2021 but are still subject to Parliamentary approval. As with the existing easement, the requirement to notify TPR under the notifiable events regime is unchanged.

Read the regulations.

Read our briefing on the easements. 

Latest HMRC newsletter

HMRC’s latest Countdown bulletin (no. 54) contains an update on final data cuts for GMP reconciliation. HMRC has issued final data cuts but schemes will not have received these where there was nil output or where HMRC was unable to trace the scheme administrator. Schemes that did not receive a final data cut can now request one until 31 July 2021.

Read the newsletter.

Each week the Allen & Overy Pensions team rounds up the latest legal and regulatory developments in the world of UK occupational pensions. Contact us if you would like to receive our podcast summary, or our full briefing by email at the start of each week.