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 Pensions Regulator (Employer Resources Test) Regulations 2021
• Briefing paper on the Social Security (Uprating of Benefits) Bill 2021–22
• FCA and TPR framework for value for money in DC pension schemes
• Guy Opperman reappointed as Pensions Minister
• New expert group to increase confidence and standards in e-signatures
• PASA eAdministration jargon buster
• PASA Benefit Statements Working Group analysis
• PDP updates
• PLSA guidance on starting conversations about pensions
• PPI paper on pensions and divorce

The Pensions Regulator (Employer Resources Test) Regulations 2021

The Pensions Regulator (Employer Resources Test) Regulations 2021 were made on 15 September 2021 and come into force on 1 October 2021. The “employer resources test” is one of two new tests for imposing a contribution notice, part of TPR’s anti-avoidance armoury, being introduced under the PSA21; changes to TPR’s relevant code of practice are also currently in draft (see our Alert). The regulations set out what constitutes the resources of the employer for the purposes of the test, and how the value of the resources is to be calculated, determined and verified.

Briefing paper on the Social Security (Uprating of Benefits) Bill 2021–22

On 15 September, the House of Commons Library published a briefing paper which provides an overview of the Social Security (Uprating Of Benefits) Bill 2021-22 (relating to the temporary suspension of the “triple lock”) which is scheduled to complete all its Commons stages on 20 September 2021.

FCA and TPR framework for value for money in DC pension schemes

On 16 September, the FCA and TPR published a joint discussion paper on developing a common framework for measuring value for money (“VFM”) in DC pension schemes. The aim of the two regulators is to “drive a long-term focus on VFM across the pensions sector”. The FCA and TPR are proposing a “common framework for disclosing information on the key elements which make up VFM: investment performance, scheme oversight – including data quality and communications, and costs and charges”. The focus of the joint discussion paper is, at this stage, on VFM in accumulation.

David Fairs, TPR’s Executive Director for Regulatory Policy, Analysis and Advice, said: “Delivering value for money in pensions is a key priority for TPR – all part of our work to put savers at the heart of what we do. Regulators, industry and others must be able to effectively assess value for money to ensure good pensions outcomes. The discussion paper sets out our ambitions for an industry-wide VFM assessment framework.”

Feedback should be submitted by 10 December 2021 and the FCA plans to publish a feedback statement setting out the next steps during 2022.

Guy Opperman reappointed as Pensions Minister

Guy Opperman has been reappointed as the Pensions and Financial Inclusion Minister following the Government’s cabinet reshuffle, which also saw Thérèse Coffey remain as Secretary of State for Work and Pensions.

New expert group to increase confidence and standards in e-signatures

The Ministry of Justice has established an Industry Working Group of experts to “improve standards, reliability and security in electronic signatures and other means of legally executing documents, and to address best practice in this area”. The group expects to produce an interim report by the end of the year, outlining its initial thoughts and areas to be explored further, along with areas that may need public consultation.

PASA eAdministration jargon buster

On 14 September 2021, the PASA eAdmin Working Group published its eAdministration Jargon Buster, which aims to support administrators, trustees, pension managers and sponsors by providing a commonly-used definition for technology terms which are relevant to pensions. Areas covered by the reference guide include “user experience and user interfaces; open banking and open finance; skills including behaviour science; and project methodologies”.

PASA Benefit Statements Working Group analysis

On 16 September, the PASA Benefit Statements Working Group published its first analysis in relation to the proposed introduction of an annual benefit statement season. The analysis considers two potential approaches:

• a common “publication date” so all benefit statements are published at the same time, no matter what their “as at” valuation date
• a common “valuation date” so all benefit statements are produced “as at” the same valuation date.

The analysis suggests that the introduction of a common “valuation date” will be more complex and would not “provide any additional benefit to the member”. Helen Ball, Chair of the PASA Benefit Statements Working Group and Partner at Sackers, said: “We support the concept of a statement season and believe the potential benefits are clear. However, the idea of common publication and valuation dates need careful consideration… It’s important for a statement season to work alongside technological enhancements, such as dashboards, to ensure longevity. Access solutions – such as web, post, email – also need careful review. Ultimately, if all of the information is available online throughout the year, the requirement of a statement season naturally falls away over time and any related legislation should take this into account at the outset.”

PDP updates

On 16 September, the PDP published a blog post on work that the programme is undertaking to ensure the security of pensions dashboards and announcing the publication of the its new consumer protection information, which sets out how the PDP views consumer protection, the risks that need to be considered, and what the PDP plans to do about it.

Helen Scriminger, Standards and Governance Lead at the Pensions Dashboards Programme, also provided an update on the programme’s ecosystem technical working group and how it’s contributing to the development of technical standards.

PLSA guidance on starting conversations about pensions

On 15 September 2021, the PLSA published guidance to help pension schemes and employers support savers’ financial wellbeing by starting a conversation about their workplace pension. The guidance is designed “to encourage employers to educate their workforce about how their pension scheme works, how they can make the most of employer contributions, and how they can make good decisions to set them up for a more secure future”.

The guidance describes the “advice/guidance boundary” and provides practical examples of conversations that would and would not fall within the realms of regulated advice (see our earlier blog). It also aims to dispel common myths and assumptions that might be barriers to some employers and schemes providing more support for savers.

PPI paper on pensions and divorce

The Pensions Policy Institute (“PPI”) has published a paper on pensions and divorce which analyses the impact of divorce on wealth and outcomes for divorced individuals. Key findings include:

• the median pensions wealth for a man aged 65-69 is just over £212,000, while for women in the same age bracket it is £35,000
• this divide between men and women exists for both married and divorced couples, with married men having the most pension wealth on average among the various groups
• fewer than 15% of couples had approximately equal pensions, with one partner possessing 90% of the pensions wealth in around half of couples.

The paper is accompanied by a video which aims to help divorcing couples understand the legal context for pension sharing.