Pensions: what’s new this week 17 January 2022
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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: Flat fees on small pots: new regulations and guidance; New TPR blog post: pensions guidance; Draft changes to trust registration requirements; Dashboards: ‘supporting a market for pensions dashboard providers’
- Flat fees on small pots: new regulations and guidance
- New TPR blog post: pensions guidance
- Draft changes to trust registration requirements
- Dashboards: ‘supporting a market for pensions dashboard providers’
New regulations have been laid before Parliament restricting the charging of flat fees on small pots in DC default arrangements that are subject to the charge cap. The restrictions take effect from 6 April 2022.
The regulations prohibit a flat fee from being deducted as part of a combination charge where a member’s pot is worth less than £100, or where the fee would reduce the value to less than that amount. Part of a fee can be charged, as long as it doesn’t take the pot below the £100 threshold. The regulations also restrict the number of charges to one per charges year. Where more than one flat fee is deducted in that time, the member’s pot must be restored to the same position as if only one charge had been made.
The DWP’s charge cap guidance has been updated to reflect these new restrictions. The guidance highlights that trustees will need to ensure sufficient levels of monitoring and controls to provide certainty as to whether the value of the member’s rights is above or below the £100 threshold. The guidance sets out when the pot should be valued and gives examples of how the rules operate.
The Pensions Regulator (TPR) has published a new blog post welcoming the forthcoming introduction of stronger requirements for savers to seek guidance when looking to access their pensions.
The government consulted last summer on draft regulations to implement its ‘stronger nudge’ to pensions guidance, which included a requirement for trustees to offer to book a Pension Wise appointment for members. The final regulations are expected to be published this month.
The blog post notes that TPR intends to produce its own guidance ahead of the requirements coming into force, to help trustees and administrators prepare for the changes. It also highlights developments by the Money and Pension Service (MaPS), which is planning to provide digital Pension Wise appointments to meet increased take-up and to use its MoneyHelper service to direct consumers to appropriate services.
Draft regulations have been published making changes to the requirements for trusts to be registered with HMRC’s Trust Registration Service. The requirements relate to anti-money laundering rules, following the extension of registration requirements to certain in-scope express trusts in line with the Fifth Money Laundering Directive. Registered pension schemes are already excluded from needing to register.
The draft regulations extend the deadlines for registration of certain express trusts due in 2022, and for updating changes of information. They also expand the exclusions from the requirement to register: these now cover trusts holding policies that pay out on temporary disablement (as well as on death, terminal or critical illness and permanent disablement), trusts holding healthcare policies, trusts holding death benefits payable under a retirement policy and trusts created in the course of opening a bank account for a minor or a vulnerable person. The exclusions now cover, for example, both a trust holding a life policy and a trust of the benefits payable under that policy, as well as the trust of a bank account holding funds for a minor. The draft regulations are due to come into force on 9 March 2022.
The Pensions Dashboards Programme (PDP) has published a blog post on ‘supporting a market for pensions dashboard providers’. This highlights the benefits the PDP sees in a wide range of providers, such as banks, fintechs, pension providers and insurers offering dashboards in addition to the Money and Pensions Service (MaPS). It also provides an update on current testing, which is taking place in conjunction with three potential commercial dashboard providers.
The government and the Financial Conduct Authority (FCA) are expected to consult in the coming months on specific requirements for dashboards, including the approach to onboarding.