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Pensions: What's new this week - 2 November 2020

Each week the Allen & Overy Pensions team, rounds up the latest legal and regulatory developments in the world of 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.

Read the latest edition of 'What's new this week' below to find out more information on the stories that matter to you. 

Government announces plans for guidance ‘nudge’

The government has published a statement of policy intent on its plans to introduce, via regulations under section 19 of the Financial Guidance and Claims Act 2018, a ‘stronger nudge’ to pensions guidance for members (or other relevant beneficiaries) seeking to access DC benefits through the pensions freedoms. It has previously proposed (see WNTW, 12 October 2020) that individuals with DC savings will be given information from age 50 about retirement options and the availability of guidance, as well as this ‘nudge’ during the application process.

The government plans to require trustees to:

  • present taking pension guidance as part of the process of transferring/accessing a DC pension pot;
  • incorporate booking an appointment into their member engagement process (at the point a member indicates they wish to take guidance); and
  • ensure that the member has either received appropriate guidance from the Money and Pensions Service (MAPS) or has opted out of this, before processing relevant applications – trustees will be required to keep appropriate records of this check. It is proposed that a statement from an individual indicating that they have received the guidance would be sufficient evidence (formal proof from MAPS would not be required). MAPS currently provides guidance to individuals aged 50 or over under the existing Pension Wise brand.

The government has said it wants to allow trustees the flexibility to choose a process that suits their scheme and members. It will consult on draft regulations, and the Financial Conduct Authority (FCA) will also make changes in respect of contract-based schemes. The Pensions Regulator (TPR) is also expected to issue guidance to support trustees. The government intends the regulations to come into force ‘at the earliest opportunity’.

A press release and statement to Parliament are also available.

Redundancies: TPR, FCA publish statement on DB transfer risks

TPR, the FCA and MAPS have published a joint statement on their engagement with Rolls-Royce and the trustees of its DB pension scheme on risks associated with increased transfer requests as a consequence of redundancies. The FCA has also issued a data request to a number of advisers who have advised on transfers from the scheme.

TPR has previously advised trustees, as part of its Covid-19 guidance, to actively monitor the number of requests for CETV quotes and the supporting advisers, and to contact the FCA if there are any unusual or concerning patterns, such as spikes in CETV requests or the same adviser handling multiple requests.

Latest HMRC newsletter

HMRC’s latest Pension Schemes Newsletter (no. 125) contains an update on new accounting for tax features available via the Managing Pension Schemes service. It also contains reminders on the following: the expiry of the Covid-19 easement for protected pension ages on 1 November; the requirement for schemes using relief at source to submit the annual return of information declaration form; and HMRC’s ongoing work on user credentials (it has asked administrators to sign into online tax services to ensure user credentials remain active).

Pension Schemes Bill update

The next Parliamentary stage of the Pension Schemes Bill is due to be completed this week – to date, a number of amendments to the Bill have been tabled for consideration at Committee stage. The proposals include a widely-publicised amendment aimed at providing, via regulations, that a member’s statutory transfer right does not apply if specific ‘red flags’ are identified as part of the due diligence process.

Pensions dashboard update

The Pensions Dashboards Programme (PDP) has published a progress update report containing a summary of work to date, and an indicative phase plan for rollout. Although the timeline may change, it suggests that voluntary onboarding of schemes may take place from 2022 (alongside ongoing testing), with the staged mandatory onboarding of schemes from 2023.

The PDP has also published a summary of responses to its recent call for input on data standards. The PDP intends to publish an initial draft version of the pensions dashboards data standards in December.

Pensions Academy Online: week commencing 23 November

Our next Pensions Academy sessions will take place online from 9.30 – 10.30am on the following dates:

  • 23 November – So you’ve had a cyber breach? What to do now
    You can’t completely eliminate the risk of a cyber breach, but how you act in the immediate aftermath of one may have a significant impact on how much damage is done and how quickly you recover. It’s also increasingly seen as an important aspect of good governance. Our experts will talk you through how to be ready to respond well to a cyber attack.
  • 25 November – Pension schemes and the sustainability horizon
    The ESG agenda for pension schemes has moved on significantly in the last few years, but there’s much further to go and the speed of travel is increasing. With major new monitoring and reporting requirements on the way in relation to climate change and wider sustainability issues, as well as increased governance requirements, we’ll show you the bigger picture of how sustainable investment is developing and help you to develop a framework for thinking about the new requirements.
  • 27 November – Legal update
    2021 is shaping up to be a year of change, with significant legal developments for pension schemes on thehorizon. We’ll help you to shape your agenda for what’s ahead.