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

• Budget 2019 – postponed
• FRC publishes “Revised and strengthened” UK Stewardship Code
• PPI publishes report on Supporting later life
• TPR reports on automatic enrolment
• Ms N (PO-22236) (PO orders transfer where provider delay caused unauthorised payment)

Budget 2019 – postponed

The Chancellor of the Exchequer, Sajid Javid, had announced that he was planning to hold a Budget on Wednesday 6 November 2019. However, he confirmed by letter to HMT on 25 October 2019 that, given the delay to Brexit and the potential for a General Election, a Budget would no longer take place on this date.

FRC publishes “Revised and strengthened” UK Stewardship Code

On 24 October 2019, the FRC published the UK Stewardship Code 2020 (“the Code”). Described by the FRC as a “substantial and ambitious revision to the 2012 edition”, the new Code will take effect on 1 January 2020.

The Code focuses on protecting the interests of UK savers and pensioners by ensuring that their money is managed responsibly, with a new emphasis on creating long-term value and on considering beneficiary and client needs. Key changes include the following:

• an extended focus that includes asset owners (such as pension funds and insurance companies) and service providers, as well as asset managers. This is intended to help align the approach of the whole investment community in the interest of end investors and beneficiaries
• a requirement to report annually on stewardship activity and its outcomes

Signatories to the Code will be:

• expected to take ESG factors, including climate change, into account and to ensure their investment decisions are aligned with the needs of their clients
• expected to explain how they have exercised stewardship across asset classes beyond listed equity, such as fixed income, private equity and infrastructure, and in investments outside the UK
• required to explain their organisation’s purpose, investment beliefs, strategy and culture and how these enable them to practice stewardship. They are also expected to show how they are demonstrating this commitment through appropriate governance, resourcing and staff incentives.

Organisations wanting to become signatories will be required to produce an annual stewardship report explaining how they have applied the Code in the previous 12 months. The FRC will evaluate reports against its assessment framework, and those that meet the reporting expectations will be listed as signatories to the Code. To be included in the first list of signatories, organisations must submit a final report to the FRC by 31 March 2021.

Adherence to the Code is encouraged by TPR in its guidance for DB and DC trustees.

In parallel, the FCA published a Feedback Statement summarising the responses it received to its earlier joint Discussion Paper with the FRC on building a regulatory framework for stewardship. The Feedback Statement sets out the FCA’s approach to stewardship requirements, and how they will work with the FRC, the Government, other regulators, and industry.

PPI publishes report on Supporting later life

On 22 October 2019, the PPI published Supporting later life. The report, the second in a series (following on from Living through later life), explores the complexity of financial and practical decisions older people may face, the current frameworks in place for supporting these decisions, and ways in which later life outcomes could potentially be improved.

TPR reports on automatic enrolment

On 24 October 2019, TPR published a report examining the impact of automatic enrolment to date, and the challenges ahead.

The annual commentary and analysis report shows that the largest increases in participation have been amongst eligible employees in the youngest age groups (in the private sector, participation in 22 to 29 year-olds rose from 24% in 2012 to 84% in 2018). It also notes the gender gap in pensions saving has been “significantly reduced”, with as many women as men now saving into a workplace pension. In addition, workplace saving among staff who are not eligible for automatic enrolment (eg because of their age or income) has nearly doubled, with the percentage of staff asking to join a scheme increasing from 16% in 2012/13 to 30% in 2017/18.

The report, published annually since the start of automatic enrolment in 2012, and bringing together analysis from the DWP and TPR, is the final report in the series.

At the same time, TPR published its latest ongoing duties survey which shows that the majority of employers of all sizes are aware of their ongoing duties in relation to automatic enrolment, and that they are confident of carrying them out correctly.

Ms N (PO-22236) (PO orders transfer where provider delay caused unauthorised payment)

TPO has upheld a member’s complaint that her transfer had not taken place when it should have done because of acts and omissions by her pension provider. Had this delay not occurred, Ms N’s transfer could have been made while the receiving scheme was still on HMRC’s QROPS list.

TPO ordered the provider to make the transfer and cover the member’s unauthorised payments charge, alongside a payment for distress and inconvenience.

For further detail, see our case summary.