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

• EIOPA issues opinions on governance and risk management of pension funds
• FRC consults on enhanced Ethical and Auditing Standards
• LGPS Advisory Board publishes briefing on CMA Order
• PPF updates general information on factors
• PPI publishes pensions gender gap report

EIOPA issues opinions on governance and risk management of pension funds

On 10 July 2019, EIOPA published the following four opinions to assist national competent authorities with the implementation of IORP II:

• an opinion on the use of governance and risk assessment documents in the supervision of Institutions for Occupational Retirement Provisions (“IORPs”)
• an opinion on the practical implementation of the common framework for risk assessment and transparency for IORPs
• an opinion on the supervision of the management of operational risks faced by IORPs
• an opinion on the supervision of the management of ESG risks faced by Institutions for IORPs.

While PensionsEurope has stated that it welcomes the ongoing dialogue with EIOPA, it considers that the opinions do not reflect the minimum-harmonisation character of IORP II.

FRC consults on enhanced Ethical and Auditing Standards

On 15 July 2019, the FRC issued a consultation proposing important changes to the UK’s Ethical and Auditing Standards. The FRC proposes to set more stringent ethical rules for auditors, in response to findings from recent audit enforcement cases and from audit inspections. In response to feedback from investors, the FRC also proposes to enhance the quality and content of auditor’s reports in order to improve transparency about what is found in the course of an audit.

Key changes proposed include:

• a clearer and stronger “objective, reasonable and informed third-party test” requiring audit firms to consider whether a proposed action would affect their independence from the perspective of public interest stakeholders rather than another auditor
• enhancing the authority of the Ethics Partner function within audit firms, in order to ensure firm wide focus on ethical matters and the public interest, and to require reporting to those charged with governance where an audit firm does not follow the Ethics Partner’s advice
• replacing the list of prohibited non-audit services that auditors of “Public Interest Entities” can provide to audited bodies with a shorter list of permitted services, all of which are “closely related” to an audit or required by law and/or regulation
• the requirement for the auditors of all UK listed entities to include in their published auditor’s reports the performance materiality threshold used.

The consultation period closes on 27 September 2019.

LGPS Advisory Board publishes briefing on CMA Order

On 12 July 2019, the LGPS Advisory Board published a briefing on the recent CMA Order (see 7days). The Order covers fiduciary management and investment consultancy services and has implications for occupational pension schemes as well as LGPS funds and pool companies.

PPF updates general information on factors

On 12 July 2019, the PPF published an updated version of its guidance, General information on PPF Factors, covering the six types of factor needed in administering the PPF, as well as for use in section 179 (levy)  and section 143 (PPF entry) valuations.

PPI publishes pensions gender gap report

On 11 July 2019, The Pensions Policy Institute published a new report, Understanding the Gender Pensions Gap. The report focuses on the pension savings gap between men and women and the major contributing factors to these differences.  It also explores the impact a range of potential policies may have on bridging the gap.