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

• ABI report on supporting customer decisions about pension withdrawals
• DWP consultation on consolidation
• DWP publishes outcome to two DC consultations, and further guidance
• EMIR clearing exemption for pension scheme arrangements extended
• FCA extends call for input on pension savers’ decision making
• PMI launch accreditation regime for lay trustees
• Taskforce on Innovation, Growth and Regulatory Reform independent report
• TPR publishes regulatory report on DB pension scheme settlement
• Axminster Carpets case – follow-up to Lloyds No.1 on arrears and limitation

ABI report on supporting customer decisions about pension withdrawals

On 16 June 2021, the ABI published a report noting pension providers’ fears that customers are not getting enough support with pension withdrawals. The ABI says that pension withdrawals are the “key remaining challenge in helping people to navigate pension freedoms”. The report explores how approaches to sustainable pension withdrawal rates could be delivered, taking account of the risks customers face when making withdrawals without receiving advice. It also considers how providers currently help their customers make decisions about pension withdrawals and explores what more providers could do in the future with the right regulatory changes.

DWP consultation on consolidation

On 21 June 2021, the DWP issued a call for evidence on “the future of the DC pension market: the case for greater consolidation”. Exploring the benefits to greater consolidation, including improved governance, lower charges and access to a more diverse range of asset classes, it seeks views on the current barriers to consolidation and on how to mitigate the potential risks of greater consolidation at a faster pace.

This call for evidence asks for ideas on how to “incentivise consolidation” for schemes with between £100 million and £5 billion of assets under management, but notes that £5 billion is only the “appropriate cut off – for now”. The consultation closes on 30 July 2021.

See our upcoming Alert for further detail.

DWP publishes outcome to two DC consultations, and further guidance

On 21 June 2021, the DWP published its joint response to two consultations on DC pension scheme’s investment and overall governance:

• September 2020 consultation on “Improving outcomes for members of DC pension schemes” on draft regulations and statutory guidance to deliver better value for money for members of DC schemes (see our Alert)
• March 2021 consultation “Incorporating performance fees within the charge cap” on draft regulations on performance fee smoothing and a call for evidence on the issue of look-through (see our Alert)

The Government states that over the past 12 months, it has set out a series of measures “to prepare the DC occupational pensions market for the challenges and opportunities ahead”, and that this response now “finalises important next steps”. Amongst other things, the response confirms that the Government will move forward with the proposed regulations which will come into force in October 2021.

In addition, the DWP has published statutory guidance for trustees of relevant occupational DC pension schemes on completing the annual value for members assessment and reporting of net investment returns. The DWP has also published updated guidance on reporting costs, charges and other information on disclosure and administration regulations. The two sets of guidance are effective from 1 October 2021.

See our upcoming Alert for further detail.

EMIR clearing exemption for pension scheme arrangements extended

On 16 March 2021, the European Commission published for consultation a draft Delegated Regulation extending the EMIR clearing exemption for pension scheme arrangements until 18 June 2022 (see 7 Days).

On 16 June 2021, Commission Delegated Regulation (EU) 2021/962 which makes this extension was published in the Official Journal of the European Union. It came into force on 17 June 2021 and is directly applicable in all EU member states.

FCA extends call for input on pension savers’ decision making

Following requests from stakeholders, the FCA has announced a four-week extension to its call for input on the pensions consumer journey which it launched with TPR on 18 May 2021 (see 7 Days). Responses should now be submitted by 30 July 2021.

PMI launch accreditation regime for lay trustees

On 17 June 2021, the PMI announced the launch of its new accreditation regime for lay trustees. This follows the accreditation programme for professional trustees, “the APTitude programme”, launched in February 2020 (see 7 Days). The new accreditation programme is intended “to help raise standards and promote excellence within the industry” and is built to “professional trusteeship standards”.

David Fairs, TPR’s Executive Director of Regulatory Policy and Advice, said: “TPR rightly expects trustees to meet high standards of trusteeship, governance and administration and welcomes initiatives such as the PMI’s accreditation scheme… Our Corporate Plan is clear that one of our top priorities is to ensure decisions made on behalf of pension savers are in their best interests. To properly consider what’s in members’ interests, trustees need the appropriate level of knowledge and understanding. With the Pension Schemes Act including new duties on climate change and stopping scams, the degree of knowledge trustees need is likely to increase.”

Taskforce on Innovation, Growth and Regulatory Reform independent report

The Taskforce on Innovation, Growth and Regulatory Reform (“TIGRR”) – a group formed to “identify and develop proposals across a range of areas that will drive innovation, growth and competitiveness through regulatory reform” – has reported its recommendations to the Prime Minister.

In relation to UK pensions and investments, TIGRR proposes that the Government should enable greater investment in “UK domestic growth”, in particular:

• enable DC pension schemes to “diversify their investments into venture capital and businesses that drive Net Zero and levelling up commitments”
• “amend matching adjustment and risk margins in Solvency II to release significant capital for investment in the UK”, and
• “attract private investment to help regenerate local infrastructure and support the UK’s levelling up agenda”.

The Government will consider and respond to the TIGRR’s independent report in due course.

TPR publishes regulatory report on DB pension scheme settlement

On 15 June 2021, TPR published a regulatory intervention report setting out how TPR worked with the employer and trustee of a scheme “to secure an improved guarantee package from the wider group.”

Erica Carroll, TPR’s Director of Enforcement, said that the case “demonstrates how productive negotiations can be carried out alongside our investigations so that the best possible outcome is achieved for savers.”

Axminster Carpets case – follow-up to Lloyds No.1 on arrears and limitation

On 18 June 2021, the High Court handed down its judgment in the Axminster Carpets case. With Mr Justice Morgan once again at the helm, the case helps clarify the arrears and limitations aspects of Lloyds No.1.

See our Alert for further detail.