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

• DWP consultation on Facilitating Investment in Illiquid Assets
• Scheme pays regulations
• HMRC guidance on GMP conversion expected in the “coming weeks”
• CDC schemes: DWP to consult on next phase later this year
• Written evidence published in response to WPC inquiry on pension freedoms
• Alpha Sandbox dashboard prototype launched
• FCA consultation on consumer redress for unsuitable advice to transfer out of the British Steel Pension Scheme
• TPR issues contribution notice
• PPF publishes Strategic Plan 2022–2025

DWP consultation on Facilitating Investment in Illiquid Assets

On 30 March 2022 the DWP published a consultation which, among other matters, seeks views on proposals and draft regulations to improve the accessibility of illiquid assets for DC pension scheme investment.

The DWP proposes to:

• amend the SIP requirements to ensure that DC schemes, and the DC section of hybrid schemes, disclose and explain their policies on illiquid investments
• require trustees of DC and hybrid schemes with over £100m in total assets to publicly disclose and explain their default asset class allocation in their annual Chair’s Statement
• amend the current restrictions on employer-related investment for master trusts with 500 or more participating employers.

The consultation, which closes on 11 May 2022, also includes the Government’s responses to:

• the consultation on “Enabling Investment in Productive Finance” (see 7 Days)
• its call for evidence on the “Future of the defined contribution pension market: the case for greater consolidation” (see 7 Days).

For more information, see our forthcoming Alert.

Scheme pays regulations

Regulations extending the information and reporting deadlines for scheme pays were laid on 29 March 2022, following a consultation by HMRC (see 7 Days). The changes apply to use of scheme pays where there has been a retrospective change of facts that affects an individual’s pension input amount and their annual allowance, including individuals affected by the McCloud remedy. The changes come into force on 6 April 2022.

HMRC guidance on GMP conversion expected in the “coming weeks”

The Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill (see 7 Days) had its second reading in the House of Lords on 25 March, at which it was confirmed that HMRC will publish supplementary guidance “in the coming weeks” on the tax implications of conversion as well as highlighting to industry where tax issues could arise for certain types of member.

CDC schemes: DWP to consult on next phase later this year

Guy Opperman, the Pensions Minister, confirmed on 28 March 2022 that the DWP intends to consult later in 2022 on a package of prospective design principles and approaches to accommodate new types of CDC schemes (see Blog).

Written evidence published in response to WPC inquiry on pension freedoms

On 30 March 2022 the WPC published written evidence from the DWP and HMT in the latest stage of its inquiry “Protecting pension savers — five years on from the pension freedoms: Saving for later life”. The evidence includes, among other matters, confirmation of the Government’s intention to extend eligibility for automatic enrolment from age 22 to age 18 and to remove the lower earnings limit in automatic enrolment in the mid-2020s. The WPC is expected to publish a report on the evidence collected during this stage of its inquiry in due course.

Alpha Sandbox dashboard prototype launched

On 31 March 2022, Moneyhub, an alpha partner to the PDP, launched a prototype pensions dashboard to show how pensions dashboards (see Alert) could potentially work from end-user and technical perspectives.

FCA consultation on consumer redress for unsuitable advice to transfer out of the British Steel Pension Scheme

On 31 March 2022 the FCA published a consultation on proposals for a consumer redress scheme to compensate British Steel Pension Scheme (“BSPS”) members who were given unsuitable advice to transfer from the BSPS between 26 May 2016 and 29 March 2018 and suffered financial loss. The redress scheme proposal follows findings by the FCA that former members of the BSPS received significantly higher levels of unsuitable advice than other transfer cases. The consultation closes in full on 30 June 2022 but the FCA has requested comments on its high-level proposals for redress calculations by 12 May 2022.

TPR issues contribution notice

TPR has published a regulatory intervention report setting out the background and reasons for issuing a CN to a former parent company following warning notices issued in March 2019, concerning the disposal of a corporate group to a shell acquisition vehicle. The corporate group included statutory employers of a DB scheme with 584 deferred and pensioner members. The CN comprised a principal sum of nearly £1.5 million and an additional sum of just over £650,000 for lost investment returns and interest, representing the first time TPR has awarded an additional sum for lost investment returns to a scheme.

PPF publishes Strategic Plan 2022–2025

On 31 March 2022 the PPF published its Strategic Plan 2022–2025, setting out its aims for the next three years. The aims include:

• completing implementation of the Hampshire uplifts for eligible members and working with the DWP to agree an approach for implementation of the Bauer judgment
• carrying out a funding strategy review and looking to reduce the amount of levy collected (provided the PPF’s funding position remains “robust” over the three-year period)
• conducting a full review of the PPF levy methodology, including a consultation on any proposed changes to levy rules
• increasing self-service online functions for members and automation of routine actions, and progressing the uploading of PPF compensation to pensions dashboards (see Alert).