Pensions UK: What's new this week - 15 February 2021
15 February 2021
This week we cover topics including: the Pension Schemes Act 2021; DB/hybrid pension scheme returns; and a new consultation on increasing normal minimum pension age. For an overview, listen to our summary podcast bringing you up to speed on the key headlines in less than two minutes.
- Pension Schemes Act 2021
- DB/hybrid scheme return: updated guidance
- New consultation on increase to normal minimum pension age
- Brexit: new guidance on cross-border issues
- New TPR podcast: pension scams
The Pension Schemes Bill has received Royal Assent and passed into law as the Pension Schemes Act 2021. Apart from some regulation-making powers, the Act is not yet in force; the substantive provisions will be brought into force on dates to be announced in secondary legislation.
The Act includes new sanctions and information-gathering powers for the Pensions Regulator (TPR), including criminal offences, a civil penalty regime, additional notification requirements on transactions, and extended grounds for issuing a contribution notice. It also contains changes to the DB funding regime, powers to restrict statutory transfer rights and to introduce new climate change risk management and reporting requirements, and the frameworks for collective DC schemes and pensions dashboards.
Parts of the Act, and some implementing regulations, are expected to be in force later this year. We are expecting a number of developments shortly including draft guidance from TPR on the new criminal offences and consultations on draft regulations (for example, the new notification requirements). A consultation on draft regulations to implement the new climate change related obligations is already underway: read our briefing.
Please contact your usual Allen & Overy adviser if you would like to discuss the implications of the Act, or to receive training on the upcoming changes.
TPR has published a further update to its scheme return guidance for DB/hybrid schemes, confirming that schemes will be asked the same questions as last year. TPR had previously said DB-only schemes might be asked to provide a website link to their published statement of investment principles and their assessment of the employer covenant (and where it would sit within TPR’s grading system), depending on upgrades to its systems. This change will not now be implemented.
There is no change to the previously announced dates: scheme returns will be issued from mid-February and the deadline for submission will be 31 March 2021.
The government is consulting on implementing its planned increase to normal minimum pension age (NMPA) from age 55 to 57. NMPA is the earliest age at which most individuals can normally take their private pension savings under tax rules. The consultation confirms that NMPA will be increased on 6 April 2028 (although it suggests that schemes might wish to increase the minimum age in their rules before that date).
The government is proposing that a member of a registered pension scheme with an unqualified right under the scheme rules (at the date of the consultation) to take pension benefits at an age below 57 will be protected from the NMPA increase in relation to benefits in that scheme. This protection would apply to all the member’s benefits under that scheme (and would not be limited to benefits accrued before 2028), and there would be no requirement to apply for the protection. The government is also proposing that the rules for the new protected pension age would be more flexible than existing rules for a protected pension age (in particular, that individuals will be able to draw benefits while working, and there would be no requirement for all benefits to be crystallised on the same date). Protection will (as now) be retained on a transfer where this is a block transfer.
Individuals with an existing protected pension age will see no change to current protections, and the NMPA increase will not apply to members of the armed forces, police and fire services schemes.
Read the consultation (the deadline for responses is 22 April 2021).
TPR has updated its guidance on cross-border issues following the end of the Brexit transition period – this includes guidance for UK-based cross-border schemes, for UK employers contributing to pension schemes based outside the UK, and for trustees/administrators (or UK-based trustees/representatives) of occupational schemes based outside the UK which receive contributions from UK-based employers.
TPR has asked those who believe that they are a UK-based cross-border pension scheme, or are a UK-based employer contributing to a non-UK scheme, to contact TPR if they have not already been contacted by TPR or a host/home regulator about changes from 1 January 2021 (email email@example.com).
Trustees of a cross-border scheme, or employers who have been contributing to an EEA scheme or are considering doing so, should seek legal advice on post-Brexit requirements, if they have not already done so.
TPR has launched a new podcast series: TPR talks. The first podcast in the series discusses developments and trends in relation to pension scams, including TPR’s recent scams pledge. Points to note include:
- Project Bloom is currently working on streamlining reporting to Action Fraud.
- A new version of the industry Code of Practice on scams is expected in March. A further version will follow later this year (to address changes to transfer rights under powers in the new Pension Schemes Act).