Pensions: what’s new this week 31 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: CDC schemes: TPR code of practice; TPR: 2022 priorities – scams, climate change and diversity; Update to scheme returns; Regulators establish framework for collaboration; Dates for your diary: Pensions Academy Online, 7-11 March 2022.
- CDC schemes: TPR code of practice
- TPR: 2022 priorities – scams, climate change and diversity
- Update to scheme returns
- Regulators establish framework for collaboration
- Dates for your diary: Pensions Academy Online, 7-11 March 2022, 9.30-10.30am
The Pensions Regulator (TPR) has published a consultation on a new code of practice (the Code) for the authorisation and supervision of collective DC schemes (CDC schemes, also labelled CMP or collective money purchase schemes). The consultation closes on 22 March 2022.
CDC schemes must be authorised by TPR to operate. The Code sets out how an application for authorisation must be made, the matters TPR will take into account when considering applications and what criteria need to be met for continued authorisation under TPR’s supervision.
For the moment, CDC schemes will only be an option for single or connected employers, and this is reflected in the Code. The consultation notes that the government’s intention is to legislate to enable further market developments, like commercial master trusts, in due course.
The draft Code focuses on requirements that CDC scheme trustees need to plan for now. TPR will revisit the Code later in the year to expand on other requirements and will produce accompanying guidance. The Code is intended to be incorporated into TPR’s forthcoming single code of practice.
TPR has published a blog post discussing its priorities for 2022. Key themes (which reflect recent TPR publication topics) are: a push for schemes to do more to report scams (including signing up to TPR’s pledge to combat scams); increased consideration of climate-related risk and ESG in trustee decision-making; and improved diversity in trustee boards.
On value for money, TPR says it will work with its regulatory partners and industry to establish common standards, setting clear expectations and sharing good practice. In the coming months it will publish feedback from, and next steps based on, its recent joint discussion paper with the Financial Conduct Authority (FCA). It is ‘committed to moving quickly on developing a common framework which will enable trustees and independent governance committees to compare costs and charges, investment performance and service standards’.
TPR gives reassurance in relation to its new criminal powers, noting that it does not intend to prosecute behaviour that it considers to be ordinary commercial activity and will ‘always take an appropriate and proportionate approach’.
The blog post also discusses the delay to the DB funding code, now expected in late summer (as announced last year); the new single code of practice, expected to be laid before parliament in summer; and the CDC Code (discussed above).
TPR has updated its guidance on scheme returns for DB and mixed benefit (hybrid) schemes to reflect changes this year. Returns will be issued in two parts, with part one containing new questions to be completed in an online form and part two with the remaining questions to be completed on Exchange as usual. The new questions include (where relevant for a scheme): requests to provide website addresses for publication of the scheme’s statement of investment principles (SIP), implementation statement, climate change report and extracts of the chair’s statement; trustee assessment of employer covenant grading; and information about the more detailed value for members (VFM) assessment.
Administrators should check that their contact details on Exchange are up to date. Scheme return notices will be issued from the end of January 2022 and returns should be submitted by 31 March 2022.
A number of regulatory bodies have signed up to a Wider Implications Framework, setting out how they will work together on issues that could have a wider impact across the financial services industry. TPR, the Money and Pensions Service, the Financial Ombudsman Service, the FCA and the Financial Services Compensation Scheme have agreed to work within the framework. The framework sets out a structure for its members to collaborate on matters of common interest ‘to achieve a better outcome for consumers, small businesses and the financial services industry’.
The programme for our next Pensions Academy Online (an update on issues for pension schemes and the people who run them) is now available. Please see the list 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