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

• The Pension Schemes Act 2017 (Commencement No. 1) Regulations 2018
• Multi-employer Pension Schemes Bill
• Draft National Employment Savings Trust (Amendment) Order 2018
• Financial Guidance and Claims Bill moves to Committee Stage
• FCA warns of increased risk of online investment fraud
• PLSA updates Corporate Governance and Voting Guidelines
• Pension scammers ordered to repay £13.7m
• TPR publishes scheme return data for 2017/18
• British Telecommunications PLC v BT Pension Scheme Trustees Limited & Bruce-Watt

The Pension Schemes Act 2017 (Commencement No. 1) Regulations 2018

The Pension Schemes Act 2017 (Commencement No. 1) Regulations 2018 have been published, and will bring into force paragraph 9 of Schedule 3 to the Pension Schemes Act 2017 from 1 February 2018.

This means that the list of issues on which TPR is required to publish codes of practice will include:

• the process for applying for authorisation of a Master Trust scheme, and
• the matters that TPR expects to take into account in deciding whether it is satisfied that a Master Trust scheme meets the authorisation criteria.

Multi-employer Pension Schemes Bill

The first reading of the Multi-employer Pension Schemes Bill in the House of Commons took place on 24 January 2018.

This Private Members’ Bill aims to make provisions relating to multi-employer pension schemes, including for the protection of unincorporated businesses, such as plumbing businesses, from certain multi-employer pension scheme liabilities, and for connected purposes.

The second reading in the House of Commons is due on 15 June 2018.

Draft National Employment Savings Trust (Amendment) Order 2018

On 29 January 2018, the DWP published the Government’s response to the consultation on proposed changes to the NEST pension scheme. The draft National Employment Savings Trust (Amendment) Order 2018 was also laid before Parliament.

The consultation sought views on proposals to improve the NEST pension scheme for the benefit of employers and members, and closed on 27 November 2017.

Specifically, the changes will:

• allow participating employers to contractually enrol their workers into the NEST pension scheme
• require NEST Corporation to carry out research with scheme members and participating employers or their representatives, in connection with the operation, development or amendment of the NEST pension scheme. The introduction of this duty is designed to align this operation to changes in data protection law (as a result of implementing the GDPR)
• give NEST Corporation the ability to close the pension accounts of members that have zero funds, if certain conditions are met. This is because the number of empty accounts is “creating inefficiencies and long run costs for the NEST pension scheme”
• clarify that individuals may join the scheme in the event of a bulk transfer with consent and will require that any amount must be applied to a NEST member’s account as a result of a bulk transfer.

In its response, the Government states that it considers that all the changes in the Order “support the delivery of the policy intent of providing a suitable low cost pension scheme to all employers meeting their automatic enrolment duties”.

Financial Guidance and Claims Bill moves to Committee Stage

The Financial Guidance and Claims Bill received its second reading in the House of Commons on 22 January 2018.

Among other changes, the Government has removed an amendment which was inserted during the Bill’s passage through the House of Lords, and which would have automatically enrolled people into guidance when accessing their pension funds. The amendment has been replaced with a rule requiring providers to ask clients whether they have received appropriate guidance.

The Bill will now proceed to Committee Stage in the House of Commons, starting on 1 February 2018.

FCA warns of increased risk of online investment fraud

The FCA has launched a campaign urging the public to be vigilant to the threat of online investment fraud.

Part of the “ScamSmart” campaign, the FCA is encouraging those considering investing to check its dedicated website. The site features an online tool, the FCA “Warning List”, which allows users to find out more about the risks associated with an investment and view a list of firms the FCA knows are operating without its authorisation.

PLSA updates Corporate Governance and Voting Guidelines

The PLSA has published an update to its Corporate Governance Policy and Voting Guidelines.

Among other changes, the 2018 PLSA AGM voting guidelines include an additional section on sustainability. The guidelines recommend that where shareholder attempts have failed to encourage companies in relevant sectors to provide a detailed risk assessment and response to the effect of climate change on their business, they should not support the re-election of the chair.

Pension scammers ordered to repay £13.7m

On 23 January 2018, the High Court ruled that four people who ran a series of scam pension schemes have been ordered to pay back £13.7 million they took from their victims. 245 members of the public were persuaded via cold-calling and similar techniques to transfer their pension savings into one of 11 scam schemes operated by Friendly Pensions Limited.

TPR had asked the High Court to order the defendants to repay the funds they dishonestly misused or misappropriated from the pension schemes – the first time such an order has been obtained. The independent trustee appointed by TPR to take over the running of the schemes will now be able to seek the confiscation of the scammers’ assets for the benefit of their victims.

Nicola Parish, TPR’s Executive Director of Frontline Regulation, said that the case “sends a clear message that we will take tough action against pension scammers.”

TPR publishes scheme return data for 2017/18

New figures released by TPR reveal that £5.4 billion was put into DC pension schemes last year, an increase of more than 21% year on year. TPR’s annual DC trust report shows that a total of £48 billion is now saved in DC pension schemes.

Memberships have increased to 12.6 million people, up by 29% over the past year and by more than 400% since the start of 2010. Master trusts account for a major proportion of the increase, with 10 million DC savers (up from 270,000 at the start of 2012).

Other key findings of the report include:

• 90% of people currently saving into a private sector pension are doing so into a DC scheme
• the reduction in the number of schemes continues. Since 2010 the number of schemes, not including micro or self-administered schemes, has reduced by 52% from 4,560 to 2,180.

British Telecommunications PLC v BT Pension Scheme Trustees Limited & Bruce-Watt

In this case, Zacaroli J considered whether British Telecommunications PLC (the Company) and BT Pension Scheme Trustees Limited, the trustee of the BT Pension Scheme (the Trustee and the Scheme respectively), had power under the Scheme rules to change the index by reference to which pensions in payment are increased.

Please see our case report for further details.