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

• Stronger nudge comes into force on 1 June 2022
• TPR and FCA publish feedback statement on driving value for money in DC pensions
• TPR issues 2022 Annual Funding Statement Analysis
• FSCS announces levy for 2022/23
• Fore Fitness Investments Holdings Ltd, Hashmi v Lorimer-Wing (High Court) – 2 February 2022

Stronger nudge comes into force on 1 June 2022

New requirements to deliver a stronger nudge to guidance come into force on 1 June 2022. Subject to certain exceptions, trustees and managers of occupational pension schemes will be required to deliver the stronger nudge in relation to applications (or communications in relation to applications) to transfer or start receiving “flexible benefits” (broadly, DC benefits including DC AVCs) received on or after 1 June 2022. See our Alert and Blog for more detail.

Similar changes being introduced by the FCA also come into force on the same date in respect of contract-based schemes (see 7 Days).

TPR and FCA publish feedback statement on driving value for money in DC pensions

On 24 May 2022, TPR and the FCA published a feedback statement summarising responses received to the joint discussion paper on value for money (VfM) in DC schemes. There were a number of areas where the responses did not show a clear consensus. TPR and the FCA will consider the metrics schemes should be disclosing to facilitate more effective VfM assessments by professional audiences, and how the disclosed information could be adapted for members, and aim to consult on policy proposals “towards the end of 2022”.

TPR issues 2022 Annual Funding Statement Analysis

On 25 May 2022, TPR published its analysis of the expected positions of DB pension schemes with valuation dates between 22 September 2021 and 21 September 2022. This is intended to give context to the 2022 Annual Funding Statement (see our Alert). The analysis shows that, as an aggregate estimate, schemes undertaking valuations at 31 December 2021 and 31 March 2022 are expected to show improved funding levels from those reported three years previously, though the position for individual schemes will vary greatly depending on factors such as the level of inflation hedging and inflation linkage in benefits. In practice, the Russian and Ukrainian conflict, COVID-19 and Brexit may all have impacted employer covenant and whilst this isn’t reflected in TPR’s analysis, it should be reflected in the scheme’s technical provisions.

FSCS announces levy for 2022/23

On 26 May 2022, the FSCS, which protects customers of financial services firms that have failed, announced its levy forecast for 2022/23 of £625m. This is a decrease from the final 2021/22 levy of £717m due to surpluses from 2021/22. £698m is forecast to be paid out as compensation.

Fore Fitness Investments Holdings Ltd, Hashmi v Lorimer-Wing (High Court) – 2 February 2022

The High Court found that a sole director was not authorised to act on behalf of a company due to contradictory provisions in the company’s articles of association based on the Model Articles. This is a somewhat surprising interpretation of the Model Articles. Model Article 11(2), which requires a quorum of at least two directors, has previously been widely interpreted as forming part of the “general rule” about decision-making by directors which does not apply where there is a sole director under Model Article 7(2) (for example, BEIS considered in its guidance on the Model Articles that they did not provide for a minimum number of directors). This case has challenged that view, and therefore has implications for sole-director companies which have adopted Model Articles 7 and 11 (or equivalent articles). If you have any questions or concerns, please speak to your usual Sackers contact.

See our case summary for more detail.