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

• Final code of practice for CDC schemes laid before Parliament
• TPR discusses penalties for breach of climate-related reporting requirements
• TPR publishes new Corporate Plan
• TPR and FCA respond to call for input on the pensions consumer journey

Final code of practice for CDC schemes laid before Parliament

On 9 June 2022, TPR laid its code of practice for the authorisation and supervision of CDC pension schemes before Parliament. In its response to the consultation on the draft code of practice, which was also published on 9 June 2022, TPR highlighted some changes it made to the draft code, including removing the expectation on trustees to have defined contingency plans to respond to periods of poor investment performance, and removing an “excessive” requirement for trustees to maintain financial reserves greater than a prudent level. The code is expected to be made after it has laid in Parliament for 40 days, ready for the new CDC authorisation and supervision regime from 1 August 2022, when the regulations on CDC schemes come into force.

TPR discusses penalties for breach of climate-related reporting requirements

TPR published a blog on 10 June 2022 on the climate-related reporting requirements (see our Alert). Over the coming months, around 100 schemes are expected to publish their first climate-related reports, often referred to as TCFD reports. TPR acknowledges the challenges faced by some schemes in relation to the availability, quality and consistency of data that schemes rely on to carry out their climate-related reporting obligations.

TPR does not anticipate issuing any penalty notices to trustees of schemes that publish their first reports over the coming months, except where:

• the report has not been published – this will result in a mandatory penalty of at least £2,500, or
• it is clear the trustees have not made a genuine effort to comply – this would result in a discretionary penalty of up to £50,000.

TPR publishes new Corporate Plan

On 13 June 2022, TPR published its new Corporate Plan for the next two years, outlining how it plans to deliver the strategic priorities set out in its long-term Corporate Strategy. TPR’s aims include:

• launching the second consultation on a new DB funding code in autumn 2022, with the expectation that the code will come into force from September 2023 (see our response to the first consultation for more detail)
• working with the DWP and FCA on a consultation on the VfM framework which should be published by the end of the year, taking into account the feedback received on the joint call for input (see below)
• continuing work on pensions dashboards, including launching a programme of education highlighting the steps that schemes need to take to meet their dashboard duties, and
• in relation to auto-enrolment, reviewing its bulk enforcement process and continuing dialogue with the DWP regarding future policy developments during 2022 – 2023.

TPR and FCA respond to call for input on the pensions consumer journey

On 7 June 2022, TPR and the FCA published a feedback statement on the joint call for input, which sought views on helping consumers make informed decisions that lead to better pension saving outcomes. Many respondents, particularly master trusts and large providers, would like to do more to support consumers’ decision-making but were concerned about straying into regulated advice or unsolicited marketing activity. Pensions dashboards were a potential key tool in enhancing engagement with pensions.

In light of the responses received, both TPR and the FCA will update their joint strategy later in 2022 to outline the areas for focus in the coming years, including, among other initiatives:

• the FCA will work with firms to understand concerns about straying into regulated advice and discuss the options for firms giving greater support to consumers within the current regulatory framework
• the FCA will consider whether further regulatory interventions to support consumer decision-making beyond the stronger nudge are needed
• TPR will review its communicating to members section of the DC guidance to provide more information on inclusivity, use of behavioural insights and timing of communications
• TPR will work with MaPS to produce guidance that enables employers to support staff returning to the workforce.