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
• Regulations giving HMRC priority in insolvency cases
• Response and further consultation on DC investment
• FCA ends fund report and accounts flexibility
• Guidance on public service pension scheme transitional arrangements
• PPI briefing note on COVID-19 and state pensions
• Mr T (PO – 38354) (delayed transfer led to loss of investment opportunity)

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.

Regulations giving HMRC priority in insolvency cases

Regulations were laid before the House of Commons on 14 September 2020 which amend insolvency legislation to give HMRC priority in the recovery of certain taxes in insolvency proceedings, under provisions made in the Finance Act 2020 (see 7 Days). The regulations come into force on 1 December 2020.

Response and further consultation on DC investment

On 11 September 2020, the DWP published a response to its February 2019 consultation on the “consideration of illiquid assets and the development of scale” in occupational DC schemes (see 7 Days). The response also includes a follow-up consultation on “proposed measures to improve outcomes” for DC scheme members. The measures are aimed at encouraging pension schemes to invest in a “more diverse range of long-term assets, including illiquid products such as venture capital and green infrastructure”, alongside “additional steps to encourage the consolidation of smaller pension schemes into larger schemes”.

The response:

• addresses stakeholder responses to the original consultation proposal of using increased transparency as a vehicle to further encourage larger schemes to broaden their investments into a range of different asset classes
• addresses stakeholder feedback on the role that measurement of performance fees and the charge cap might play in limiting the ability of schemes used for AE default funds to access less liquid investment classes, such as venture capital, for their members
• consults on a proposed legislative change to the way compliance with the charge cap is measured for performance fees to give trustees greater flexibility in these investment decisions, and invites views on a proposal to further extend this flexibility with an alternative approach to measurement
• consults on changes to legislation and new statutory guidance to “support and accelerate the process of consolidation in the DC market, and to extend access to a more diverse range of investment classes”. Trustees of smaller schemes would be required to assess key elements of the value achieved by their scheme and to report on the outcome of that assessment. Where this assessment shows that members would achieve better value in a larger scheme they are expected to initiate wind up and consolidate
• consults on other changes to legislation and statutory guidance “to improve DC pension scheme member outcomes” in response to the February 2019 consultation.

The new consultation closes on 30 October 2020. For more detail, please see our upcoming Alert.

FCA ends fund report and accounts flexibility

On 9 September 2020, the FCA published an update in relation to flexibilities which gave fund managers extra time to produce their annual and half-yearly fund reports and accounts because of operational challenges in the context of COVID-19 (see 7 Days). “Now that businesses have had time to adjust to the changed environment”, the FCA intends to end the temporary relief in stages over the coming months. The update includes a timetable for when this relief will end, depending on a fund’s accounting date.

Guidance on public service pension scheme transitional arrangements

On 11 September 2020, the Home Office published guidance on the public service pension schemes consultation to remove the discrimination identified in the McCloud / Sargeant litigation (see 7 Days). The guidance aims to provide more information on the purpose of the consultation, who is affected/in scope, how the consultation document addresses the future pension provision and the next steps.

PPI briefing note on COVID-19 and state pensions

On 8 September 2020, the PPI published a briefing note on what COVID-19 means for the triple lock and state pension inflation. The note sets out the history of state pension inflation, outlines uncertainties around state pension costs, and explores the potential impact of changing inflation mechanisms on the cost of the state pension and on pensioners.

Mr T (PO – 38354) (delayed transfer led to loss of investment opportunity)

TPO has upheld a complaint against the James Hay Partnership, after holding that an avoidable transfer delay, constituting maladministration, led to the member suffering substantial financial loss.

For more detail, please see our case summary.