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

• Coronavirus – Sackers response
• Treasury Direction on Coronavirus Job Retention Scheme published
• ABI warns against ‘pensions panic’
• Companies House eases strike-off policy and late filing penalties
• EIOPA statement on mitigating the impact of Coronavirus on the occupational pensions sector
• Updated HMRC Coronavirus Job Retention Scheme guidance
• RPI consultation extended
• ICO regulatory approach during the Coronavirus pandemic
• ICO blog on video conferencing
• PPF starts new insolvency risk scoring
• Updated Coronavirus guidance from TPR – salary sacrifice, certification and paying less than the statutory minimum
• Updated TPR guidance on DC scheme management and investment
• TPR blog on protecting savers

Coronavirus – Sackers response

At Sackers we are committed to ensuring that the Coronavirus outbreak causes minimal disruption for our clients, and have taken several steps to ensure it is ‘business as usual’. For details of these steps, as well as key points for trustees and employers to consider in light of the outbreak (which we will continue to update), please see the dedicated section of our website, or talk to your usual Sackers contact.

Treasury Direction on Coronavirus Job Retention Scheme published

On 15 April 2020, the Chancellor published a Treasury Direction, containing the legal framework for the Coronavirus Job Retention Scheme (“CJRS”). It sets out HMRC’s responsibility for the payment and management of amounts to be paid under the CJRS, and gives details of those amounts and the terms of the scheme. The Direction should be read alongside HMRC’s guidance – see “Updated HMRC Coronavirus Job Retention Scheme guidance” below.

ABI warns against ‘pensions panic’

On 17 April 2020, the ABI published an article warning people “not to see their pensions as a quick way of raising cash, and to think twice before making any rash financial decisions during this uncertain time”. The article, which follows similar statements from other industry bodies (see 7 Days), explains that because of the impact of Coronavirus “there is concern that people could be tempted to use the pension freedoms to access their pensions at age 55, without thinking through the longer term consequences, or falling prey to pension scammers out to rob savers of their pensions”. The ABI recommends that savers should:

• think twice before taking money out of their pension if the rules allow it
• get authorised financial advice or guidance before they make any decision
• remember that pensions are typically invested in a range of assets and
• beware of scammers.

Companies House eases strike-off policy and late filing penalties

On 16 April 2020, Companies House updated its Coronavirus guidance to include a section on changes to its strike-off policy and late filing penalties. As a result of Coronavirus, for a “temporary period”, to be reviewed and updated from 1 May 2020, HMRC will:

• ease strike off activity
• treat late filing penalty appeals sympathetically if the late delivery of accounts was caused by the coronavirus outbreak
• provide a break for companies to pay late filing penalties and
• provide additional support with payment plans for late filing penalties.

HMRC will “continue to write to companies who are late filing their annual accounts or confirmation statement and help them bring their record up to date”.

EIOPA statement on mitigating the impact of Coronavirus on the occupational pensions sector

On 17 April 2020, EIOPA published a statement on principles to mitigate the impact of Coronavirus/COVID-19 on the occupational pensions sector in Europe, recognising “the stabilising role” that pension schemes can play as long-term investors. The statement, addressed to national competent authorities (“NCAs”), outlines principles that NCAs should adhere to in relation to schemes’ business continuity and operational risk, liquidity, funding situations, protection of members and beneficiaries, and communication with sponsors, members and beneficiaries.

Updated HMRC Coronavirus Job Retention Scheme guidance

HMRC has released a number of updates and new pieces of guidance in relation to the CJRS – a scheme to reimburse employers for employment costs of furloughed employees (those placed on a temporary leave of absence due to Coronavirus) (see 7 Days). The updates include:

• an extension of the CJRS to the end of June (and updates to the existing guidance to reflect this), announced on 17 April following on from the Government’s announcement that social distancing measures would be kept in place
• guidance on how to calculate the amounts due under the CJRS, including in relation to pension contributions (published on 17 April 2020)
• updates to reflect a change to the date on which employees must have been included on the employer’s payroll to be eligible for the CJRS, from 28 February 2020 to 19 March 2020 (with extra provisions around this), and further detail around how the scheme works eg for new employers taking on employees from another business
• a new step-by step guide for employers, explaining the information that employers need to provide to HMRC to make a claim through the CJRS and the processes involved (published on 17 April 2020)
• confirmation that the online service for employers to claim under the CJRS is now available, and guidance on how to claim for wages through the CJRS (published on 20 April 2020).

RPI consultation extended

On 16 April 2020, HMT extended the deadline for responses to the consultation on proposals to address the “shortcomings” of RPI (see our Alert) from 22 April to 21 August 2020 (“subject to Coronavirus-related developments”). A letter from the Chancellor, Rishi Sunak, explained that this extension is being given in light of a change in focus due to the Coronavirus pandemic. The letter states that the Government and UKSA will respond to the consultation “in the autumn”. We are responding to the consultation.

ICO regulatory approach during the Coronavirus pandemic

On 15 April 2020, the ICO published a document setting out its regulatory approach during the Coronavirus pandemic. It states that the ICO is “committed to an empathetic and pragmatic approach”. Whilst continuing to recognise the rights and protections granted to people by the law, and taking firm action against those looking to exploit the public health emergency, it will focus its efforts on the most serious challenges and greatest threats to the public, and be flexible in its approach, taking into account the impact of the potential economic or resource burden its actions could place on organisations.

The document examines these areas in further detail, noting the ICO’s Regulatory Action Policy and principles it will follow during this period.

ICO blog on video conferencing

On 15 April 2020, the ICO released a blog discussing “what to watch out for” when using video conferencing. This encourages consideration of privacy and security settings, assessing phishing risks, checking your organisation’s policy on which platforms may be used, ensuring software is up to date and keeping under review whether the service being used is appropriate.

PPF starts new insolvency risk scoring

The PPF has now moved over to Dun & Bradstreet (D&B) to provide insolvency risk scores for the 2021/22 scheme year (see 7 Days). Scores from Experian (the previous provider) will be used to calculate the levy for the 2020/21 levy year. The first invoices using D&B insolvency risk scores will be issued in autumn 2021, using monthly scores generated between April 2020 and March 2021.

The PPF encourages schemes to engage with D&B and monitor scores on the portal. In an extension to its usual timeframes, data submitted by schemes up to 30 April will be able to be used in D&B’s calculation of the April 2020 scores.

Updated Coronavirus guidance from TPR – salary sacrifice, certification and paying less than the statutory minimum

On 17 April 2020, TPR updated its guidance on automatic enrolment and DC pension contributions for employers, originally published on 9 April (see our Alert). This update provides “additional clarification on salary sacrifice, certification of defined contribution (DC) pension schemes and pension schemes where the employer pays less than the statutory minimum”.

The changes to the guidance include a new section on “paying employer contributions less than the AE statutory minimum”. This section explains that, where an employer pays lower contributions than the statutory minimum eg because the employee has opted for a lower level of contributions, “the employer may only claim, under the Coronavirus Job Retention Scheme, the amount paid or due to be paid to the pension scheme under the pension scheme rules and not the higher amount of the statutory minimum AE contribution”.

This update also includes a reference to a new piece of technical guidance, aimed at larger employers, on the interaction between salary sacrifice arrangements, DC certification and the CJRS.

In relation to salary sacrifice, the technical guidance states that any contractual obligations an employer has entered into and the obligations in pension scheme rules “continue to apply as normal”. However, “as all of the grant claimed must be paid to a furloughed worker in the form of money this may mean that, where a salary sacrifice arrangement is in place for pensions, an employer will need to amend their payroll processes to calculate the pension contribution to be paid to the pension scheme under the pension scheme rules”. It then gives examples of how this should work in practice.

The technical guidance on DC certification relates to employers who certify that they can treat their DC pension scheme as a qualifying scheme because it meets an alternative AE statutory minimum contribution requirement. This may not match the grant received under the CJRS (up to 3% of qualifying earnings of the furlough pay). The guidance explains that employers “may be able to change their scheme rules to match the AE statutory minimum employer contribution based on qualifying earnings. They can end the current certification period early under the certification rules”. However, an employer considering this “will need to consider the same list of factors as previously outlined in the section on reducing employer contributions to the AE statutory minimum employer contribution” (see our Alert).

Updated TPR guidance on DC scheme management and investment

On 17 April 2020, TPR also updated its Coronavirus guidance for trustees on DC scheme management and investment (originally published on 27 March (see 7 Days)).  The updates include a new section on employers wanting to reduce contributions to a DC scheme, which references the updated guidance for employers on this point (see above) and TPR’s recent easement for employers unable to consult fully in line with the usual requirements (see our Alert).  It also adds a section on trustee involvement where an employer requests scheme rule changes to reduce contributions.  This states that, if trustees have the sole or shared power to make the change, they will need to make sure that the decision “is in the best interests of the members”. This can include factoring in “the likelihood of the employer being able to continue as a going concern if they continue to pay the current rate of contributions”, but trustees should make sure they “are satisfied that this is a genuine risk and give thought to whether any change should be temporary”.

TPR blog on protecting savers

On 15 April 2020, TPR published a blog on how “we can protect savers by working together”. The blog refers to guidance from TPR and other regulators on “the heightened risk of members being targeted by scammers during the pandemic”. It also discusses pension transfers, reassuring trustees of DB schemes that “they’ll have the time they need to deal with cash equivalent transfer value (CETV) requests, whether because they need to reassess how transfers are calculated or because they need to prioritise pension and bereavement payments”. It refers to the easement granted for trustees who suspend CETV quotations (see our Alert) and states that “now industry must step up and protect savers using every possible means”.

TPR also refers to the FCA’s guidance for pensions providers on requirements where savers are looking to access their pensions (see 7 Days) and “urges” all providers and trustees to use that guidance.