Pensions: what’s new this week 28 February 2022
28 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 workplace pensions.
This week we cover topics including: TPR publishes example of climate change compliance; GMP fixed rate revaluation reduced; Technical consultation: Scheme Pays deadlines; Private members’ Bill on extending auto-enrolment; PLSA stewardship and voting guidelines.
- TPR publishes example of climate change compliance
- GMP fixed rate revaluation reduced
- Technical consultation: Scheme Pays deadlines
- Private members’ Bill on extending auto-enrolment
- PLSA stewardship and voting guidelines
- Dates for your diary: Pensions Academy Online, 7-11 March 2022, 9.30-10.30 a.m.
The Pensions Regulator (TPR) has published an illustrative example of how trustees might work through the requirements of the climate change governance and reporting regulations (which have applied to schemes with GBP5 billion+ of relevant assets since 1 October 2021 and will apply to those with GBP1 billion+ from 1 October 2022).
The example outlines possible approaches to a wide range of areas that will need to be addressed. For example, training to improve trustee knowledge and understanding; obtaining information on data gaps and challenges; setting short, medium and long-term periods for different sections of a scheme and then reviewing climate-related risks and opportunities across those time periods; and reviewing whether governance and oversight arrangements have been put in place to comply with the regulations.
TPR emphasises that this is not a checklist and that scheme-specific governance structures, trustee skills and investment arrangements will affect how the regulations are implemented in relation to any particular scheme.
Overall, the illustrative example is a reminder of the breadth and complexity of activities required in order for trustees to comply with the regulations. While not mandatory, it will be helpful as a guide to the way TPR expects schemes to approach the new duties.
The government has published a consultation response and regulations confirming a reduction in the rate of fixed rate revaluation of Guaranteed Minimum Pensions (GMP). Members of schemes that were previously contracted-out, who leave pensionable service after 5 April 2022, will have any GMP revalued at a rate of 3.25% per annum if their scheme uses the fixed rate revaluation method, reduced from 3.5% per annum.
HMRC has published a technical consultation on regulations extending certain deadlines in respect of Scheme Pays and the annual allowance tax charge. They include deadlines for provision of information by scheme administrators to HMRC and members and employers to scheme administrators where new details become available that affect an individual’s pension input amount for a previous tax year. The consultation closes on 15 March 2022 and the regulations are intended to take effect from 6 April 2022.
A private members’ Bill proposes changes to extend the automatic enrolment regime to all jobholders aged 18 and above (currently the age threshold is 22), and to remove the lower qualifying earnings threshold.
The Pensions and Lifetime Savings Association (PLSA) has published guidelines for pension scheme trustees on what they see as the key issues schemes should be considering on stewardship and exercising voting rights. It includes a policy framework for scheme stewardship, a corporate governance framework and voting guidelines. Key themes include consideration of climate change impact and executive remuneration.
Our next Pensions Academy Online series of webinars provides updates and insight on the topics below:
7 March Money laundering and proceeds of crime – what trustees need to know
8 March Pension Schemes Act 2021: new offences and notifiable events – where are we now?
9 March Handling an investigation
10 March Legal update – including transfers, dashboards, single code, superfunds and more
11 March Climate change governance and reporting – theory and practice