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Pensions: What's new this week - 5 October 2020

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05 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. 

PPF consults on draft levy rules for 2021/22

The Pension Protection Fund (PPF) is consulting on its 2021/22 levy rules (press release here). In light of the Covid-19 pandemic, the PPF’s focus is on setting the most appropriate approach for 2021/22 rather than conducting a full review of the rules or proposing rules for a multi-year period. It plans to return to setting the rules for a multi-year period from 2023/24.

The core policy proposals are to change the level of the cap on the risk-based levy (from 0.5% of liabilities to 0.25% of liabilities) and to introduce adjustments for smaller schemes. The PPF has also reduced its levy estimate to £520 million. It expects that approximately 90% of schemes paying a risk-based levy will see a reduction in levy for this year, compared to the 2020/21 invoice. It is not altering the levy parameters at present, but will keep this under annual review.

The PPF is seeking views on its published draft documents and proposals, including whether it should extend its Covid-19 related payment easement to the 2021/22 levy year, and whether any amendments to its contingent asset standard forms are needed. It is also proposing a change to the Contingent Asset Appendix to clarify that if a contingent asset has been accepted for a levy year on or after 1 April 2018, the documentation does need to be re-executed again.

The consultation document also notes that the PPF has been working with TPR on possible changes to the information to be submitted on asset classes; it is also proposing a related review of various stress factors (with changes to be introduced in 2022/23). 

The consultation closes on 24 November 2020. The PPF expects to publish its final rules and policy statement at the end of January 2021. 

TPR blog: climate change, implementation statements

The Pensions Regulator (TPR) has published a new blog post urging trustees to build capacity on climate change-related issues, and to act now to ensure that they are prepared for the new climaterelated obligations due to be introduced via the Pension Schemes Bill. As a reminder, the government has recently been consulting in relation to proposed new duties and reporting requirements (see WNTW, 1 September 2020), and TPR is expected to consult shortly on its new single Code of Practice, which will also cover ESG content (see WNTW, 7 September 2020).

The blog post also includes some comments on implementation statements, which many schemes are now preparing (depend on the timing of their annual reports). TPR notes that the statement is an opportunity for trustees to demonstrate the work they are doing on members’ behalf, as well as reflecting on areas for improvement or change. It also suggests that trustees could explain how they have embedded principles in service agreements and checked that these have been upheld, and how they have engaged with or challenged investment service providers. For more on this topic, please see our guide to preparing for the implementation statement. 

Investment: Stewardship Code, impact investing

The Financial Reporting Council has published a Review of Early Reporting to the 2020 Stewardship Code, aimed at supporting prospective signatories in meeting the new reporting requirements. As a reminder, the 2020 Code is voluntary, and sets out a new definition of stewardship and greater expectations about investment and reporting, including a focus on environmental, social and governance factors. The Pensions Regulator has previously encouraged schemes to sign up to the Code, and to adhere to it in their stewardship activities. You can read more here. 

The Impact Investing Institute has published five principles on impact investing for trustees and is seeking feedback on these principles. The Institute is also planning to publish a paper in November on fiduciary duties and impact investing – a copy of the draft paper is available on request. 

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 pensions.team@allenovery.com. 

PensionsTalk: pay cuts and pensions – points to watch

Many employers are considering changes to working arrangements in response to Covid-19 (such as salary reductions, reduced working hours, or arrangements involving unpaid leave, as well as the new Job Support Scheme). As ever, there are potential pensions implications and our latest PensionsTalk blog post discusses some of the key points to watch out for.

TPR: new investigatory powers

TPR may be authorised to obtain communications data where this is necessary for an ‘applicable crime purpose’, under regulations that came into effect on 25 September adding TPR to the list of public authorities with powers to obtain communications data under the Investigatory Powers Act 2016. Further changes to TPR’s information-gathering powers are included in the Pension Schemes Bill, which is due to have its second reading in the House of Commons on 7 October. You can read more about TPR’s information-gathering powers here. 

ICO: updated Covid-19 guidance, new consultation

The Information Commissioner’s Office (ICO) has updated guidance on its regulatory approach during the Covid-19 pandemic (and published an open letter to organisations). In particular:

  • Complaints: the ICO expects organisations with a backlog of complaints to have robust recovery plans in place to ensure they reduce these backlogs within a reasonable timeframe.
  • Personal data breaches: the ICO continues to expect organisations to report personal data breaches without undue delay, and within 72 hours of becoming aware of the breach. The revised guidance states that the ICO will continue to act proportionately, and in line with its Regulatory Action Policy, but reiterates that normal reporting rules apply.

The ICO has also launched a consultation on draft statutory guidance on how it will regulate and enforce data protection legislation. The consultation closes on 12 November 2020.

Latest HMRC newsletter

HMRC’s latest Pension Schemes Newsletter (no. 124) provides details of a number of Covid-19 related easements that are now being extended; HMRC has not announced an extension of the easement on protected pension ages, but will provide a further update on this.

The newsletter also contains a reminder about annual returns of information (for schemes operating relief at source), and about the Managing Pension Schemes service. Scheme administrators that have not signed into online tax services for some time are asked to take action to ensure their user credentials are not deleted.