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
• Updates on extended furlough scheme
• FCA guidance on financial reporting
• Countdown Bulletin 53 – May 2020
• HMRC issues pension schemes newsletter 120
• PLSA chair’s statement template
• PLSA climate change forum
• TPR blog on transfers and scams
• Pensions bodies’ Coronavirus guide for pension 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.

Updates on extended furlough scheme

On 29 May 2020, the Chancellor announced details of the extended Coronavirus Job Retention Scheme (“CJRS”).  The key changes relevant to pensions are that, from 1 July 2020, businesses will be able to bring furloughed employees back part time whilst still receiving support from the scheme and, from August, that employers will be asked to pay increasing amounts towards the cost of furloughed employees:

• June and July: the Government will pay 80% of wages (up to a cap of £2,500) as well as employer NICs and pension contributions. Employers are not required to pay anything
• August: the Government will pay 80% of wages (up to a cap of £2,500). Employers will pay employer NICs and pension contributions
• September: the Government will pay 70% of wages – up to a cap of £2,187.50. Employers will pay employer NICs, pension contributions and the remaining 10% of wages to make up 80% in total (up to a cap of £2,500)
• October: the Government will pay 60% of wages up to a cap of £1,875. Employers will pay employer NICs, pension contributions and 20% of wages to make up 80% in total (up to a cap of £2,500).

The Chancellor also confirmed that the CJRS will close to new entrants on 30 June 2020.

Various pieces of HMRC guidance have been updated to reflect these changes.

FCA guidance on financial reporting

On 27 May 2020, the FCA published a Primary Market Bulletin, announcing that issuers that would usually be required to publish their half yearly financial reports within three months of the end of the relevant reporting period have an extra month to do so before the FCA takes any action against them. This extension “is intended to be temporary while the UK faces the disruption of the coronavirus pandemic and its aftermath”. The FCA “will keep its application under review”.

The Bulletin also includes a statement on market practice on “going concern” assessments. The FCA acknowledges that financial statements are likely to need to include additional remarks from auditors in the current circumstances and urges issuers and auditors to be “clear and transparent” about the impact of the pandemic. It also advises market participants that they “should not draw unduly adverse inferences from these disclosures, nor from issuers changing their financial calendars to make use of the extra time we have allowed them”.

There is commentary on the FCA’s view on engagement with shareholders at this time. The FCA encourages issuers “to engage with shareholders to ensure investors are appropriately informed and aware of the issuer’s actions”. This includes formal disclosures to the market, but the FCA also suggests that issuers “could consider if there are other ways to engage with and provide participation opportunities for shareholders as far as practicable”.

Countdown Bulletin 53 – May 2020

HMRC released Countdown Bulletin 53 on 28 May 2020. The Bulletin confirms that HMRC plans to issue final GMP reconciliation data cuts “by the end of July 2020”. This timeline “is dependent on changing departmental priorities and any changes to this date will be communicated as soon as possible through the issue of another Countdown Bulletin”.

The Bulletin also acknowledges that differences have been noted between GMP amounts provided on final data cuts and GMP output by the online GMP checker service. It explains that “GMP data provided in a final data cut is a ‘lift’ of GMP held at a point in time, whereas the online GMP Checker service provides a real time GMP amount calculated at the point of request”. HMRC confirms that the online GMP checker service is accurately providing GMP figures. It advises schemes to check the GMP amounts provided in final data cuts against their own records. Where they cannot agree the GMP amount provided in the data cut they should use the online GMP checker service. If they cannot agree the GMP output from the online checker this can be queried with HMRC at a life event.

HMRC issues pension schemes newsletter 120

On 27 May 2020, HMRC published pension schemes newsletter 120. The newsletter includes further temporary changes to processes as a result of Coronavirus:

• recognising that it may be difficult for scheme administrators to obtain signatures on the APSS107 registered pension schemes annual statistical return, HMRC will accept them without a signature. Some small updates have been made to the form of the return
• scheme administrators are reminded that the deadline for submitting the 2019/20 annual return of information is 5 July 2020
• the process for applying for a National Insurance number has been suspended for three months; HMRC will review the position at the end of three months and provide an update in the June 2020 newsletter
• schemes should make sure they use the correct routes for contacting HMRC’s Pension Scheme Services.

PLSA chair’s statement template

On 28 May 2020, the PLSA published a template “to help pension schemes comply with Chair’s Statement requirements”. It covers the areas on which trustees of relevant schemes are required to report, including:

• investment strategy and governance
• processing of core financial transactions
• disclosure of member-borne transaction costs and charges
• assessment of value for members
• how trustees have met trustee knowledge and understanding requirements.

The template “is designed to be used in conjunction with TPR’s detailed guidance and quick guide”. The PLSA notes that individual schemes will need to consider their own circumstances when meeting the statutory requirements, and should continue to consult their own advisers as they produce their statements.

PLSA climate change forum

The PLSA announced on 27 May 2020 that it “is inviting pension schemes, the wider financial services industry, the public and stakeholders to give their views on the practical ways the retirement savings sector can address climate risk”. It will lead a series of online roundtables from 12 June “to give pension schemes a structured forum to discuss ideas, solutions and barriers to the pension industry operating in ways which have a positive impact in helping the UK achieve its Paris Climate Agreement commitments”.

The PLSA is also inviting interested parties to submit evidence on the following questions:

• how are pension funds currently incorporating climate considerations into their investment approaches?
• what are the biggest practical challenges to effective consideration and implementation of climate-aware investment strategies?
• to what extent will existing industry, policy or regulatory initiatives be effective in overcoming these challenges?
• are there any industry, policy or regulatory initiatives which would support you in consideration of climate risks and opportunities?

Evidence and views can be submitted via the PLSA website until 14 August 2020.

TPR blog on transfers and scams

TPR published a blog on 26 May 2020 focused on pension transfers and scams, in light of the Coronavirus pandemic. The blog brings together TPR’s previous guidance on the topic, for example on DC transfers being core financial transactions (see 7 Days), communicating to members, including the template letter to be sent to members on requesting a transfer (see 7 Days) and easements for timing of transfers – noting that this is not a “blanket pause”, if trustees can process the requests, they should do so, and they should get advice before taking a decision to delay – (see our Alert).

Pensions bodies’ Coronavirus guide for pension savers

The DWP, FCA, FSCS, MAPS, PPF, TPO and TPR published a joint guide on 26 May 2020 for pension savers on “COVID-19 and your pension”. The guide “outlines all the protections that are in place, and directs savers where they can go to seek free, impartial guidance should they have any further questions”.