Pensions: What's new this week - 12 October 2020
13 October 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.
Fraud risk alert: signatures in online documents
Fraudsters are constantly evolving their methods and there have been recent reports of attempted identity theft using signatures in pension scheme documents that are published online. This commonly applies to the Statement of Investment Principles, Chair’s statement and annual reports, but could include other documents that your scheme has chosen to publish.
The legal requirements for the signature and online publication of specific documents vary but, as a precaution, we recommend that trustees review their online publications and redact signatures or substitute a typed name in the published version. It’s worth noting that the Government, in response to a consultation on register reforms, has recently said that it will press ahead with rules allowing signatures to be suppressed on Companies House filings – that is, publicly available information will show the data relevant to the filing but not the signature.
If you have any concerns or questions, please contact your usual Allen & Overy adviser.
Planned changes to advice and guidance requirements
The government is planning to introduce information requirements for individuals with DC pension savings, so that from age 50 they must be given information about retirement options and the availability of guidance, as well as receiving a ‘nudge’ to guidance during the application process. A provision in the Financial Guidance and Claims Act 2018 will be brought into effect to allow regulations to be made. However, the government has no immediate plans to review or lower the £30,000 threshold at which individuals are required to take independent advice when seeking to transfer or convert safeguarded benefits.
The government is also planning to make changes to statutory transfer rights where specific issues are identified; these restrictions will be enabled by the Pension Schemes Bill. In addition, the government intends to introduce an information and guidance requirement where additional ‘red flags’ are identified in the transfer process.
Webinar: Covid-19 fallout: navigating redundancy risks
On Thursday 15 October at 12:30pm, we will be hosting an interactive webinar on navigating redundancy risks linked to Covid-19 with tips for risk mitigation from our employment and pensions experts. To register for the webinar, please email firstname.lastname@example.org.
Covid-19: update on protected pension age easement
HMRC has confirmed that there will be no extension to the Covid-19-related easement for protected pension ages, which is due to expire on 1 November 2020.
Pension Schemes Bill update
- strengthen the Pensions Regulator’s powers and the existing sanctions regime, including new criminal offences, civil penalties and information-gathering powers;
- make changes to the DB funding regime;
- introduce new climate change risk management and reporting requirements for trustees – the government has recently consulted on related policy proposals, and the Financial Conduct Authority has stated that it intends to consult on implementing client-focused TCFD disclosures for asset managers and personal pension schemes in the first half of 2021;
- restrict statutory transfer rights;
- create the framework for collective DC schemes; and
- create the framework to support pensions dashboards.
The next Parliamentary stage (Committee) is due to be completed by early November – the first sitting of the Public Bill Committee will be on 3 November, and the Committee is currently calling for submissions. We will provide a further report in due course.
VAT: United Biscuits decision
The Court of Justice of the European Union (CJEU) has handed down its judgment in the United Biscuits case, following a referral from the Court of Appeal.
Historically, HMRC had treated pension fund management services provided by a regulated insurance company as an exempt supply for VAT purposes but this policy was discontinued in 2019. However, pension fund management services to DC schemes (including those provided by an insurer) are covered by a separate exemption under EU law as special investment funds. UK legislation has been amended to continue to provide a VAT exemption for DC funds post-Brexit – some conditions apply, including that the fund must contain the pooled contributions of more than one member (further HMRC guidance, including for hybrid schemes, is available here). You can read more about historic VAT treatment here and here.
In United Biscuits¸ the CJEU has confirmed that investment fund management services supplied for an occupational pension scheme that do not provide any indemnity from risk, do not fall within the exemption from VAT for insurance transactions in the relevant EU directive. The case is now expected to return to the Court of Appeal.
Pre-packs: new report, draft regulations
The Insolvency Service has published a report on pre-pack sales in administration. The report lists a number of legislative and other steps that the government will be taking to address issues including sales to connected parties, the quality of information provided to creditors, and the transparency of pre-packs (draft regulations are available here). The report notes that the Pension Protection Fund (PPF) does not generally see any evidence that pre-packs are being used as a vehicle for abandoning pension liabilities; the PPF has said that in most cases it has reasonable engagement with companies ahead of a pre-pack sale.