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 (Charges and Information) Regulations 2018 and guide published
• MPs seek answers from pension funds on climate risk
• CMA publishes analysis of information available to trustees on fees and quality
• FCA to consult on proposals to introduce a public register
• HMRC updates pension statistics
• PLSA calls for workers, suppliers and pension funds to be given voice in corporate governance
• TPR continues to roll out 21st Century Trusteeship campaign

Data Protection (Charges and Information) Regulations 2018 and guide published

Draft Data Protection (Charges and Information) Regulations 2018 have been published.

The regulations will replace the previous regime under the Data Protection (Notification and Notification Fees) Regulations 2000, and set out:

• the yearly charges payable by data controllers to the Information Commissioner’s Office (“ICO”)
• the information that data controllers must give to the ICO to determine charging levels
• what constitutes exempt processing
• special provisions in cases where there is more than one data controller (including business partnerships)

“Small occupational pension schemes” (defined as schemes with fewer than 12 members) that are not subject to an exemption will only be liable to pay the tier 1 fee, regardless of size or turnover.

The final version of the regulations is due to come into force on 25 May 2018, to tie in with the GDPR which will also come into force on that date.

The ICO has also published guidance for data controllers on the data protection fee. The guide states that the ICO intends to publish an “online self-assessment tool” to help controllers work out the fees that will apply to them, “before 25 May 2018”.

MPs seek answers from pension funds on climate risk

The Chair of the cross-party Environmental Audit Committee has announced today (5 March 2018) that it has written to the top 25 pension funds in the UK to ask how they manage the risks that climate change poses to pension savings. The letters form part of the Committee’s inquiry into Green Finance.

It follows the publication of a letter from the DWP (also on 5 March 2018) that there is widespread misunderstanding amongst trustees on the scope of their fiduciary duty in relation to environmental risks.

Mary Creagh MP, Chair of the Environmental Audit Committee said, “We want to know what pension funds are doing to safeguard people’s pensions from the financial risks of climate change. The climate change risks of tomorrow should be considered by pension funds today. A young person auto-enrolled on a pension today may be 45 years away from retirement. Over that timescale these climate change risks will inevitably grow. We are examining whether pension funds are starting to take these risks into account in their financial decision making.”

CMA publishes analysis of information available to trustees on fees and quality

On 1 March 2018, the Competition and Markets Authority (“the CMA”) published a working paper entitled Investment Consultants Market Investigation – Working paper: information on fees and quality, as part of its investigation into investment consultancy.

The working paper presents the CMA’s “analysis and emerging findings to date in respect of the information available to pension trustees on the fees and quality of investment consultants and fiduciary managers.” It focuses primarily on whether trustees have access to the necessary information to assess (and subsequently monitor) their current and potential providers, and updates its thinking on remedies.

Any responses to the paper should be submitted by 22 March 2018.

The paper confirms that the inquiry is on-going and that the CMA aims to publish its provisional decision report in July 2018.

FCA to consult on proposals to introduce a public register

On 26 February 2018, the FCA released a statement announcing that it will consult on proposals to make information available “on a wider range of individuals at authorised firms”.

The FCA and the PRA currently maintain a public financial services register, the “FS Register”, of the firms they regulate and the individuals they have approved. Following the FCA’s final report of its asset management market study, it consulted on extending the Senior Managers and Certification Regime (“SM&CR”) to almost all regulated firms.

The FCA has now received feedback in response to the proposals, and confirms that it will consult “by summer 2018” on policy proposals to address it. In addition, the FCA states that it plans to issue an update “shortly” on its work to improve the usability of the FS Register, which incorporates feedback from the Work and Pensions Select Committee.

HMRC updates pension statistics

On 28 February 2018, HMRC published updated statistics relating to contributions to personal pensions and the cost of pension tax relief on occupational pension schemes in the public and private sectors, as well as individuals’ personal pensions. The figures show that the cost of pension tax relief remained relatively stable, increasing only from £38.5 billion in 2015/16 to £38.6 billion in 2016/17.

PLSA calls for workers, suppliers and pension funds to be given voice in corporate governance

The PLSA has called for workers, pension funds and other stakeholders to be given “real powers” as part of the UK’s new corporate governance regime.

Responding to the FRC’s consultation on changes to the corporate governance code, the PLSA welcomed new proposals to introduce greater stakeholder voice into boardroom decision-making by requiring firms to introduce worker directors, stakeholder committees or non-executive directors with designated responsibility for stakeholder issues.

Luke Hildyard, Policy Lead for Stewardship and Corporate Governance, said “Companies need to account for their employment models and working practices far more effectively than is currently the case. […] The proposed new measures will help in this respect, and [it is] good news that companies have been allowed the flexibility to choose which option works best for them. However, the authority and accountability of the new corporate governance regime needs clarification and there is a risk that these new measures will represent an ineffective gesture unless the different options for increasing stakeholder voice include key rights and responsibilities.”

The PLSA’s response also:

• warns that the proposed new FRC guidance does little to discourage excessive executive pay awards
• welcomes the focus on diversity at senior levels of leading companies
• recommends that the Stewardship Code should ask investors to outline how they consider the environmental and social impact of their investments.

TPR continues to roll out 21st Century Trusteeship campaign

TPR has released further papers in its campaign to protect workplace pension savers by driving up the standards of governance across pension schemes.

The latest instalments look at “Trustee training and improving your knowledge”, and “Skills and experience” (looking at the selection, review and evaluation of the trustee board).

TPR is not creating new or higher standards. Instead, the campaign, which is 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. Earlier releases looked generally at good governance, trustees’ roles and responsibilities, and “clear purpose and strategy”.