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Pensions: what’s new this week 14 February 2022

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14 February 2022

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: Government maintains auto-enrolment earnings thresholds; State pension age consultation; High Court considers issues on dependency and conflicts of interest; TPR update on employer-related investment prosecution; ICO seeks input on further anonymisation and pseudonymisation guidance.

Government maintains auto-enrolment earnings thresholds

The government has announced that for 2022/23 the automatic enrolment earnings trigger and the qualifying earnings band will remain at their current levels (GBP10,000 and GBP6,240 to GBP50,270 respectively). The announcement points out that this represents lower thresholds in real terms (as average earnings increase), meaning that more workers will be caught by the requirements.

Read more.

State pension age consultation

The government has launched a consultation on what should be taken into account when setting the future state pension age. The government is required to review the state pension age every six years and the consultation will be used to inform recommendations on what metrics should be considered in that review. Input is sought on areas such as intergenerational fairness, changes in the nature of work, and sustainability and affordability.

Read the consultation.

High Court considers issues on dependency and conflicts of interest

The High Court has considered the meaning of dependency in relation to death benefits and the management of conflicts of interest: Punter Southall Governance Services Ltd v Benge and another. The case involved a request by an independent trustee for the court to ‘bless’ its contested decision to pay death benefits to a member’s partner, who was also a trustee of the scheme.

In considering the scheme’s test for dependency, the judge found that a requirement that a person be dependent on a member for ‘all or any of the necessaries of life’ is materially the same as the definition of dependency under the Finance Act 2004, and relates to the things that a person needs to maintain their lifestyle, ‘having regard to his class and position in life’. In this case, this meant that the trustees should take into account that the member’s partner had ‘moved up in the world’, and developed a lifestyle that could only be maintained because of the member. The judgment noted that mere cohabitation and the payment of expenses from a joint account are not sufficient to demonstrate dependency, but the fact that properties were owned by the member and his partner as co-owners was material and a ‘paradigm case of inter-dependency’.

On conflicts of interest, the court ruled that excluding a trustee from decisions on which they were conflicted, and seeking independent advice, were reasonable steps to manage a conflict of interests. The trustees had not abdicated responsibility by getting legal advice on whether the dependency test was met, and were fully entitled to rely on that advice unless it was based on flawed instructions.

Read the decision.

TPR update on employer-related investment prosecution

The Pensions Regulator (TPR) has announced that the former owner of Norton Motorcycles has pleaded guilty to three charges of breaching employer-related investment (ERI) rules. The charges relate to three DC schemes of which the individual was the sole trustee; more than 5% of the value of the assets of each scheme was invested into his business, in breach of the ERI restriction.

The Pensions Ombudsman (TPO) has previously upheld complaints by members of the schemes about various actions by the former owner/trustee, and also ordered him to make a payment to restore the funds paid out in breach of trust. TPO referred the ERI issue to TPR. The prosecution reflects the fact that breach of the ERI rules is a criminal offence which carries an unlimited fine and/or a prison sentence of up to two years. Sentencing will take place later this month.

Read TPR’s announcement.

ICO seeks input on further anonymisation and pseudonymisation guidance

The Information Commissioner’s Office (ICO) is seeking input on two further chapters of its draft guidance on anonymisation, pseudonymisation and privacy-enhancing technologies. The guidance is being released in stages and further chapters are due to be published at regular intervals. The new chapters cover (among other things) how to ensure anonymisation, the difference between anonymisation and pseudonymisation, and how to approach pseudonymisation to help reduce risk. The consultation closes on 16 September 2022.

Read the consultation.