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Pensions: what’s new this week 29 November 2021

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: the Pensions Regulator’s updated code of practice on contribution notices, the latest annual revaluation order, and a factsheet by the Pensions Ombudsman on unpaid pension contributions.

PSA21: updated TPR code of practice

The Pensions Regulator’s (TPR) updated code of practice on contribution notices, and related guidance, are now in force (as of 25 November 2021). TPR had updated these materials to reflect the new powers in the Pensions Act 2021; draft versions were published in September but the new code could not come into force until the statutory process was complete: read the commencement instrument.

Read the code and code-related guidance.

TPR has also added a note to some of its existing enforcement policies to state that it is currently reviewing these in light of the Pension Schemes Act 2021. The relevant policies are: the DB funding regulatory and enforcement policy; the DC compliance and enforcement policy; the compliance and enforcement policy for public service pension schemes; and the prosecution policy.

Latest revaluation order

The latest annual revaluation order sets the higher revaluation percentage at 3.1% and the lower revaluation percentage at 2.5% for the period from 1 January 2021 to 31 December 2021. These annual orders set out the statutory minimum level of revaluation for pension benefits (excluding guaranteed minimum pensions) for deferred members where the final salary method of revaluation is used. The order comes into force on 1 January 2022.

Read the order.

TPO factsheet on unpaid pension contributions

The Pensions Ombudsman (TPO) has published a factsheet aimed at members, setting out the sources of help available if an employer is not paying required contributions over to a workplace pension scheme. The factsheet suggests contacting the employer directly, getting guidance from MoneyHelper, and the possibility of making a whistleblowing complaint to TPR. It also suggests that, for individuals seeking to resolve issues that affect only them, a complaint to TPO against the employer may be a better way to get contributions paid and possible compensation.

Read the factsheet.

TPR blog post: reminder of auto-enrolment duties

TPR has published a new blog post reminding employers of their auto-enrolment (and re-enrolment) duties, commenting that TPR will take compliance action where employers fail to complete re-enrolment duties on time. It also comments on areas in which pensions inequalities persist, and notes that TPR continues to monitor the ‘gig economy’ closely.

Read the blog post.

Executive pensions: new pay guidelines

The Investment Association (IA) has published its new executive pay guidelines. On pensions, the IA notes that:

  • The alignment of executive pensions with the wider workforce will continue to be a priority for investment managers, who will expect to see a plan to align pension contributions for directors with the contribution levels of the wider workforce by the end of 2022 (90% of FTSE companies analysed have already met this).
  • IVIS AGM voting guidance will Red Top any new remuneration policy that does not explicitly state that any appointed executive director will have their pension contribution set in line with the majority of the workforce, and any remuneration report where executive pension contributions are not aligned to the majority of the workforce rate (or where there is not a credible action plan to align pension contributions for incumbent directors by the end of 2022).

The IA also notes that Remuneration Committees should be incorporating the management of material environmental, social and governance (ESG) risks as performance conditions in variable remuneration, and that the rationale for the selected ESG performance metrics and targets should be disclosed to investors. Where companies have incorporated ESG risks and opportunities into long-term strategy but have not yet incorporated ESG metrics into remuneration structures, they should explain how ESG metrics will be incorporated into the remuneration structure and the approach they will take in future years.

Read the press release.

Read the Principles of Remuneration.