7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• Data Protection Bill receives first reading in House of Lords
• Finance Bill 2017 to 2018 – draft clauses published
• The Pensions Act 2014 (Commencement No. 11) and the Pension Schemes Act 2015 (Commencement No. 2) Regulations 2017
• DWP consultation on FAS compensation cap and long service
• FCA makes Market Investigation Reference for investment consultancy services
• HMRC Trusts and Estates Newsletter: September 2017
• ICO consults on draft GDPR guidance on contracts between processors and controllers
• TPR launches 21st Century Trusteeship campaign
• TPR publishes s89 report into Nortel case
• Work and Pensions Committee membership agreed

Data Protection Bill receives first reading in House of Lords

The Data Protection Bill was given a first reading in the House of Lords on 13 September 2017. Its second reading, including general debate on all aspects of the Bill, is scheduled for 10 October 2017.

The main aim of the Bill is “to make data protection laws fit for the digital age in which an ever increasing amount of data is being processed and empower people to take control of their data”. Whilst in large part the Bill will bring the General Data Protection Regulation into UK legislation, the DDCMS has confirmed that it will also “preserve existing tailored exemptions that have worked well” in the current Data Protection Act. These include exemptions for financial services firms in relation to money laundering and terrorist financing, and to allow, where justified, the processing of sensitive and criminal conviction data without consent to allow employers to fulfil employment law obligations.

The Government has published a number of factsheets on the Data Protection Bill.

Finance Bill 2017 to 2018 – draft clauses published

On 13 September 2017, the Government published draft legislation and supporting documents for Finance Bill 2017 to 2018.

The draft legislation includes measures introducing powers for HMRC to register and de-register certain pension schemes, as announced in the Government’s response to its consultation on measures to tackle pension scams and fraudulent pension schemes. In particular, the measures extend HMRC’s powers to refuse to register a pension scheme, to include where the scheme is a Master Trust pension scheme and has not been authorised by TPR, or where a sponsoring employer of an occupational pension scheme is a dormant company.

The final contents of Finance Bill 2017 to 2018 will be subject to confirmation at the autumn Budget 2017, which the Government has confirmed will be held on Wednesday 22 November 2017.

The Pensions Act 2014 (Commencement No. 11) and the Pension Schemes Act 2015 (Commencement No. 2) Regulations 2017

The Pensions Act 2014 (Commencement No. 11) and the Pension Schemes Act 2015 (Commencement No. 2) Regulations 2017 were made on 11 September 2017 and come into force today, 18 September 2017.

The Regulations bring into force Section 44 of the Pensions Act 2014 Act (disclosure of information about transaction costs to members etc.), which among other things amends the disclosure requirements of the Pension Schemes Act 1993 (“the 1993 Act”).

These provisions place a duty on the Secretary of State, in relation to money purchase schemes that are occupational pension schemes, to make regulations requiring the disclosure of information about transaction costs and requiring information on transaction costs and administrative charges to be published. Section 44 also imposes a duty on the FCA to make rules to similar effect in relation to certain personal pension schemes, by inserting a new section into FSMA.

The Regulations also bring into force requirements for persons to have regard to any guidance prepared from time to time by the Secretary of State when complying with disclosure requirements.

DWP consultation on FAS compensation cap and long service

On 18 September 2017, the DWP released a consultation seeking views on draft regulations increasing the cap for Financial Assistance Scheme members with long pensionable service.

Assistance provided by the FAS is capped. The consultation seeks views on draft regulations to apply an increased cap in respect of FAS members with long pensionable service (over 20 years) in a single scheme. It asks if the regulations achieve the policy intent, and operate correctly. Whether to apply the long service cap to the FAS and if so at what level it should be set at is not within the scope of the consultation – the introduction of an increased FAS long service cap was announced by the then Minister for Pensions on 15 September 2016.

Amending the rules would bring the cap in line with that of the PPF after the DWP introduced the same changes for the lifeboat fund in April 2017.

The consultation closes on Wednesday 25 October 2017.  The increased cap is currently expected to be implemented in April 2018.

FCA makes Market Investigation Reference for investment consultancy services

On 14 September 2017, the FCA confirmed its final decision to make a Market Investigation Reference (“MIR”) to the Competition and Markets Authority (“CMA”) in relation to investment consultancy and fiduciary management services.  This is the first time that the FCA has made such a reference to the CMA.

The FCA has the power to make a MIR when it has reasonable grounds to suspect that any features of a financial services market prevent, restrict or distort competition.

In the interim report on its asset management market study published in November 2016, the FCA announced it had made a provisional decision to make a MIR. In response, the three largest investment consultants (Aon Hewitt, Mercer and Willis Towers Watson) offered the FCA a package of undertakings in lieu (“UIL”) of a reference to address its concerns.

Although the FCA welcomed the UIL package proposed, it noted that it could not be confident that the package would provide a comprehensive solution to the adverse effects of competition identified. So, alongside its asset management market study final report published in June 2017, the FCA announced a provisional view to reject the UIL.

Following further consultation, the FCA has considered the responses it received and made a final decision to reject the UIL and make a MIR.

HMRC Trusts and Estates Newsletter: September 2017

HMRC’s latest Trusts and Estates Newsletter confirms that HMRC has published two new forms to help trustees and pension scheme administrators meet their information obligations on taxable lump sum death benefits paid to trusts from pension schemes.

ICO consults on draft GDPR guidance on contracts between processors and controllers

On 13 September 2017 the ICO published a consultation on its draft guidance on contracts and liabilities between controllers and processors under the GDPR.

The GDPR builds on the existing requirements of the DPA to have a written contract in place between data controllers and processors. The GDPR also goes further, specifying the detailed terms that such a contract must contain with the aim of setting high standards and protecting the interests of individuals (known as “data subjects”).

The draft guidance explains:

• what data controllers must include in their contracts
• what responsibilities and liabilities data processors have under the GDPR.

The consultation closes on 10 October 2017.

TPR launches 21st Century Trusteeship campaign

TPR has today (18 September 2017) launched its campaign to protect workplace pension savers by driving up the standards of governance across pension schemes.

TPR is not creating new or higher standards. Instead, the campaign, part of TPR’s commitment to support schemes by being clearer and more directive, will outline how people involved in running schemes can take action to meet expected standards and what action TPR will take if they don’t improve.

Recent research by TPR showed that many trustee boards, particularly in small and medium schemes, have failed to act on TPR’s codes and guidance to meet standards of good governance.

Anthony Raymond, Acting Executive Director for Regulatory Policy at TPR, said: “Good governance is the bedrock of a well-run pension scheme and there is a clear link between good governance and good fund performance. It is not a ‘nice to have’ but an essential part of effective scheme management – for all schemes. […] We are now communicating our expectations more clearly to trustees. Those who fail to respond to our more directive approach may face further regulatory action.”

TPR publishes s89 report into Nortel case

TPR has published a regulatory intervention report on the use of its anti-avoidance powers in seeking financial support for the Nortel Networks UK Pension Plan.

In 2010, TPR’s Determinations Panel held that Financial Support Directions (“FSDs”) should be issued to several Nortel group companies to provide support to the pension plan. A settlement was reached in October 2016, and became legally effective in May this year. Following the settlement agreement becoming effective, TPR, together with the trustee and the PPF, concluded that it would not be reasonable to use its powers, and accordingly agreed to cease its anti-avoidance case.

Payments totalling over £1 billion are expected to be paid into the UK plan over the forthcoming months, and the plan’s trustee expects the proceeds to be sufficient to allow benefits to be secured outside the PPF.

Mike Birch, TPR’s Director of Case Management, said: “We welcome the start of payments following the settlement reached last year, which we believe gives the UK pension scheme a fair and proportionate share of the proceeds from the disposals of the Nortel group’s worldwide assets […]As well as highlighting the impact of Nortel’s insolvency on the members of the UK pension scheme, this case also resulted in an important precedent from the UK Supreme Court that FSDs are effective when issued against insolvent companies.”

Work and Pensions Committee membership agreed

The Work and Pensions Committee membership for the 2017 Parliament was confirmed on 11 September 2017.

The Committee is continuing its inquiry into the “gig economy’s” impact on working practices and workers’ rights. Following the publication of the Taylor Review into Modern Working Practices, the DWP Select Committee and BEIS Select Committee will be holding a joint hearing with its author, Matthew Taylor, on 11 October 2017.