Pensions: What's new this week 15 June 2020
16 June 2020
Welcome to your weekly update from the Allen & Overy Pensions team, bringing you up to speed on the latest legal and regulatory developments in the world of occupational pensions.
Listen to our latest podcast or read the full version of 'What's new this week' below to find out more information on the stories that matter to you.Contact us if you would like to receive our weekly audio update or full briefing by email on Monday mornings.
Pension Schemes Bill update
After several months without progress through Parliament, the Pension Schemes Bill is due to move to the next stage in the House of Lords (Report) on 30 June. To date, only one proposed amendment has been listed for the Report stage: to require the Money and Pensions Service to provide certain information by way of a pensions dashboard service (although further amendments may be listed in due course). As a reminder, the Bill contains proposals to:
- strengthen the Pensions Regulator’s (TPR) powers and the existing sanctions regime, including new criminal offences, civil penalties and information-gathering powers;
- make changes to the DB funding regime;
- introduce new climate change risk management and reporting requirements for trustees;
- restrict statutory transfer rights;
- create the framework for collective DC schemes; and
- create the framework to support pensions dashboards.
Corporate Insolvency and Governance Bill update
The Corporate Insolvency and Governance Bill has had its Second Reading in the House of Lords; the Committee stage is scheduled for 16 June 2020 – the Bill is being fast-tracked through Parliament, meaning that Parliament has less time to scrutinise the Bill. In response to concerns during the debate about potential ramifications for DB pension schemes and the Pension Protection Fund (PPF), the government stated that it is ‘working closely with key stakeholders’ to determine any implications for the PPF, TPR and pension schemes.
The Bill contains a mixture of permanent reforms and temporary measures in response to Covid-19 – you can read more about these in this briefing from our Restructuring team. We will provide a further report on the Bill in due course.
Transfers: new FCA rules, consultation
The Financial Conduct Authority (FCA) has announced new measures designed to address weaknesses across the DB transfer market and improve standards, including:
● New rules and guidance on pension transfer advice, including a ban on contingent charging (except in limited circumstances) – this follows a consultation last year (see WNTW, 5 August 2019). The implementation date for the ban is 1 October 2020 (note transitional arrangements may apply in relation to existing work). There are also additional measures in relation to the introduction of ‘abridged advice’, addressing conflicts of interest in charging models and increasing disclosure of charges to consumers, and new CPD requirements.
● A consultation on new guidance on advising on pension transfers, particularly DB to DC transfers, as well as a scheme data template (to help advisers collect data from DB schemes) and an updated version of the factsheet for employers and trustees on providing support with financial matters without having to be authorised. The draft factsheet includes a new section on safeguarded benefits (ie benefits that are not money purchase or cash balance benefits, such as DB benefits), which covers issues including arranging for members to get regulated advice. There are also two new examples (including where trustees provide indicative transfer values online). The consultation closes on 4 September 2020.
Other Covid-19 updates
According to a statement to Parliament, the Department for Work and Pensions has established a cross-government and regulator group to assess and respond to the impact of Covid-19 on pensions, and has also been working with industry stakeholders. The statement also notes that the government continues to monitor the situation to assess if there has been any increase in scam activity as a result of Covid-19. Trustees should familiarise themselves with TPR’s expectations for processing transfer requests in light of Covid-19 (see WNTW, 1 June 2020), in light of Covid-19, including in relation to scam risk.