Pensions: What's new this week - 21 September 2020
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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.
Consultation: DC governance, investment and consolidation
The government is consulting on a number of changes to DC governance and reporting requirements, aimed at improving outcomes for DC members. Some of the changes are very limited in scope, but others will apply more broadly.
Smaller relevant schemes (with assets of less than £100 million) are being targeted with specific obligations designed to encourage (or force) under-performing schemes to consolidate and wind up. Other changes affecting schemes more widely include updated requirements for the annual Chair’s statement (including related disclosure obligations); additional scheme return reporting obligations; and clarifications relating to the calculation and reporting of costs and charges.
You can read more about the consultation proposals in our briefing ‘DC governance, investment and consolidation: more changes ahead’. If you have comments that you would like to be incorporated in our response to the consultation on an anonymous basis, please contact your usual A&O adviser by 15 October 2020. The consultation closes on 30 October 2020.
Covid-19: new TPR guidance on reporting, enforcement
The Pensions Regulator (TPR) has published updated Covid-19 guidance on reporting and enforcement. The updated guidance covers:
- Late payment reporting: TPR has for several months allowed an extension of time for reporting late payments, but is now asking schemes to revert to normal reporting from 1 January 2021. However, it will allow a three month transitional period for systems and processes to be adjusted and for employers to work with providers to ensure contributions are up to date. The requirement to report material payment failures that have been outstanding for 90 days (rather than the 150 day easement) will become mandatory from 1 April 2021. TPR has also updated its Covid-19 page on late payment reporting.
- Chair’s statement: TPR will revert to reviewing chairs’ statements submitted on and after 1 October 2020 as usual. It will not publish details of chair’s statement fines in the penalties section of its website at the time of the next compliance and enforcement bulletin (but may revert to its usual approach to publication in future).
- Audited accounts: From 1 October 2020, TPR’s normal approach to enforcement will apply to late preparation of audited accounts.
- Investment governance: TPR does not expect to take regulatory action if a SIP review is not delayed beyond 30 September 2020. From 1 October 2020, its normal approach to enforcement will apply.
TPR’s press release also notes that its guidance for trustees considering employer requests for a reduction or suspension of deficit recovery contributions remains unchanged at present and that deferrals may continue to be appropriate in some circumstances. This is being kept under review.
High Court orders ‘serial rectification’ of deeds
The High Court has ordered ‘serial rectification’ of three successive pension scheme deeds due to an error that was replicated in three of the scheme’s trust deeds: SPS Technologies v Moitt.
The judge was satisfied that there was a compelling case for rectification – there was an error in relation to the early retirement provisions for members with transferred-in service in a 1998 definitive deed, that favoured deferred members over active members on early retirement. This had subsequently been included unnoticed in a 1999 definitive deed and a 2003 deed of amendment, but the scheme had consistently been administered on a basis that ignored the incorrect amendment. The power of amendment in this case was a unilateral one, so it was only necessary to consider the intention of the claimant employer.
Update: HMRC priority of debts
Changes to the priority of debts on insolvency, making HMRC a secondary preferential creditor in respect of certain tax debts on insolvency, will take effect from 1 December 2020. The Finance Act 2020 made changes to the preferential debt framework, and new regulations will bring some additional items within scope of the changes. The government plans to publish a factsheet on the new priority of debts before the regulations take effect.
The changes could reduce the funds available for distribution to unsecured creditors, including where pension liabilities rank as unsecured debts. The policy paper is available here.
5MLD: new regulations
New regulations making changes to money laundering and trust registration requirements have been laid before Parliament. This follows draft regulations that confirmed that trusts including UK registered pension schemes and pure protection life insurance policies and those paying out on critical illness or disablement, including group policies, would be exempt from registration via the Trust Registration Service.
The new regulations contain only limited changes from the previous version, in relation to controlling interests in a third country entity. The regulations will come into force over a staggered period, but the earliest changes will come into force on 6 October 2020. We will report further once HMRC has published its planned guidance.
PPF: moratoriums, restructuring plans
In July, the government expanded the scope of moratoriums and restructuring plans (introduced by the Corporate Insolvency and Governance Act 2020) in respect of relevant co-operative and community benefit societies (and some other entities), and made related changes to the Pension Protection Fund’s powers (see WNTW, 27 July 2020). You can read more about key implications of the Act here and here.
Due to technical issues, the government has had to revoke and replace the statutory instrument relating to the PPF’s powers. The new regulations are available here (there are no substantive changes).