Part 5 – Pensions Ready Reckoner

24 / 11 / 2021

PARLIAMENT
Recent LegislationEffective DateEffect
Pension Schemes Act 2021 (Royal Assent 11/01/2021) – key provisions:    
Climate Change1/10/2021Climate Change Regulations imposing reporting obligations on large schemes – click here for article in this Pensions Compass.
Contribution Notices powers and new criminal offences1/10/2021Widens TPR’s anti-avoidance powers relating to DB schemes.
Employer Resources Regulations1/10/2021Ancillary to TPR’s new CN power where employer resources reduced.
Information Powers Regulations1/10/2021Wider managing powers for TPR to issue information notices, interviews and inspection of premises.
Transitional Regulations1/10/2021Disregard of certain events prior to 1 October 2021 for TPR’s anti-avoidance powers as above.
DC schemes – Administration Investment, Charges & Governance Regulations1/10/2021DC schemes increased reporting obligations on trustees, and changes to permitted charging.
Compensation (Fraud Compensation Fund) Act 2021  20/10/2021Paves way for Government loan to the PPF to enable PPF to pay compensation to eligible schemes from the Fraud Compensation Fund.
Occupational and Personal Pension Schemes (Conditions for Transfers Regulations)30/11/2021Aimed at ensuring trustees can spot and block transfer requests caused by scammers. Click here for our article in this Pensions Compass.
Proposed LegislationDateEffect
Dormant Assets Bill (published 11/05/2021)Spring 2022?Aimed at reuniting individuals with their ‘lost’ financial assets, and where not possible, providing for the money to be used for social and environmental purposes.
Online Safety Bill (published 11/05/2021)Spring 2022?Hopefully will make life harder for pension scammers and other fraudsters. See also the Conditions For Transfers Regulations above.
Finance (No. 2) Bill 2021‑2022 (published 04/11/2021)Spring 2022 (to have effect from 6 April 2022)Various measures including: Tax provisions to facilitate the transfer of dormant assets (see above).Changes to scheme administrators’ obligations to pay members annual allowance charges under mandatory Scheme Pays. Increase in normal minimum pension age from age 55 to 57 from 6 April 2028; the window to retain pre-existing protected ages was closed on 3 November 2021.
Future Finance BillUnknownProvisions enabling top-up payments to be made to low earners using a Net Pay Arrangement for their pension contributions.
Governance and Amendment Regulations re Investment Consultants and Fiduciary ManagersDelayed, expected by 30/06/2022Alignment of pension legislation with the Competition & Markets Authority Order 2019.
Fraud Compensation Fund – Levy Amendment RegulationsExpected 1/04/2022Increases in levy payable by schemes to the Fraud Compensation Fund, given the extra PPF compensation expected to be payable – see above under “Recent Legislation”.
Notifiable Events Amendment Regulations (DB schemes)Expected 1/04/2022New events to be notified to TPR and in certain cases scheme trustees (change in control of an employer, sale of material proportion of business or assets and/or granting of certain security rights). TPR’s Consultation on these proposed Regulations opened on 8 September 2021 and closed on 27 October 2021. The timing and content of the notifications are controversial – click here [insert hyperlink] for our Podcast.
SuperfundsBy 2024?The Government has not ruled out a Bill for the authorisation of superfunds (Pensions Minister’s announcement 12 February 2021). Meanwhile, TPR’s interim regime for superfunds continues.
Climate ChangeTreasury paper 18/10/2021 “Greening Finance”(1) Government’s wide ranging policy document relating to more disclosure on climate measures. For scheme trustees these measures once developed will be in addition to the TCFD disclosures already required for the largest schemes.
(DWP Consultation 1/10/2021 (closes 6/01/2022)(2) Proposed Regulations to amend the existing Climate Change Regulations (which came into force recently on 1/10/2021) to require the trustees of the largest occupational pension schemes to, so far as they are able, also adopt and apply a metric to report on how far the scheme’s investments align with the Paris Agreement climate goal. It is envisaged this requirements will apply from 1/10/2022. Click here for the article in this Pensions Compass. The DWP Consultation includes useful draft Guidance explaining the metrics and the alignment process. Other matters in the DWP Consultation: In relation to trustees’ stewardship of scheme investments the DWP proposes to issue non-statutory Guidance regarding how voting rights and investor engagement is dealt with in schemes’ statements of investment principles, and to issue statutory Guidance so schemes make their Implementation Statements more meaningful e.g. as to the exercise of voting rights.

FORTHCOMING COURT DECISIONS – CASES PENDING/JUDGMENTS AWAITED
TopicEffect   
RPI/CPIH Judicial ReviewOn 9 April 2021, the Ford, M&S and BT pension schemes announced they are applying for permission to bring judicial review proceedings against the Government re its decision on 25 November 2021 to align RPI with CPIH. Click here to see our article in December 2020 Pensions Compass “RPI – light at the end of the tunnel”.
Late notification for Fixed Protection 2012 Executors of Harrison v HMRCThe First-Tier Tribunal dismissed the taxpayer’s appeal on 3 February 2020. The taxpayer (through his executors) has appealed to the Upper Tribunal, hearing date fixed for 27 October 2021. The rules for late notification of Fixed Protection differ from the late claim rules  for Primary or Enhanced Protection – see Gibson v HMRC and Gammell v HMRC below under Recent Decisions.
Late application for enhanced and primary protection Ketley v HMRCThe First-Tier Tribunal dismissed the taxpayer’s appeal and held the taxpayer had no reasonable excuse for not filing for protection and for not notifying thereafter. Upper-Tier Tax Tribunal appeal hearing due on 4 May 2021. Decision awaited.
Correct meaning of scheme’s revaluation provisions De La Rue PLC v De La Rue Pension Trustees Limited High CourtThe High Court is being asked to decide the correct interpretation of revaluation provisions in the scheme’s rules. The case is listed for a 3 day hearing starting on 15 December 2021.
Whether Valuation valid and other matters Bristol UCU and others v Trustee of Universities Superannuation Scheme (USS) High CourtApplication to High Court to bring proceedings against the USS for alleged breach of duties in relation to Valuation and other matters and as to the validity of proposed benefit cuts. Hearing date awaited.

FROM THE COURTS – RECENT DECISIONS
TopicEffect
GMP sex equalisation Lloyds Bank High Court, 20 November 2020In 2018 the High Court left open the impact of GMP sex equalisation on Transfers. The hearings on Transfers took place in May and October 2020. On 20 November 2020 the High Court ruled how Transfers should be treated for GMP sex equalisation purposes – see our article “Transfers and GMP Equalisation – Clarity at last?” in December 2020 Pensions Compass.
Time limit for claiming Primary or Enhanced Protection for lifetime allowance Gibson v HMRC First-Tier Tribunal,
3 November 2020
The First Tier Tribunal decided that the taxpayer had a reasonable excuse for failing to meet the filing deadline of 6 April 2009 namely the taxpayer’s reliance on poor pension advice; and that the taxpayer had filed for protection without unreasonable delay after the excuse ceased. Likewise, in Gammell v HMRC the First-Tier Tribunal decided on 24 February 2021 that the taxpayer had a reasonable excuse for his late claim for enhanced protection having relied on advisers.  See also Gammell v HMRC, First-Tier Tribunal 24 February 2021. This is a developing legal area and advice is essential.
Transfer to Gibraltar QROPS – liability Burns v Burns High Court, 18 January 2021Whether transfer was a breach of trust. Click here to see article in  May 2021 Pensions Compass.
Divorce – division of pension rights Finch v Baker Court of Appeal, 28 January 2021Whether different pension allocation available on appeal. Click here to see article in May 2021 Pensions Compass.
SIPP loss claims Adams v Options Court of Appeal, 2 March 2021Whether the SIPP provider and administrator is liable to the SIPP member for investment loss where the member decided to invest in store pods. The High Court decided that the contract was ‘execution only’ and there was no liability. The Court of Appeal in its judgment on 1 April 2021 upheld the High Court’s view. However, Mr Adams’ claim succeeded in part on other grounds – click here [insert hyperlink] for the article in May 2021 Pensions Compass. The SIPP provider sought to appeal to the Supreme Court but permission to appeal was refused on 30 July 2021.  
RPI Britvic v Britvic Pensions Court of Appeal, 10 June 2021On 17 January 2020 the High Court decided that “or any other rate decided” by the Principal Employer permitted only a higher rate. The Court of Appeal reversed the High Court’s decision and decided that the words should have their literal meaning namely “any other rate, whether higher or lower”.  
Limitation and forfeiture ‘Axminister’ Penson Pension High Court, 17 June 2021The same Judge as in the November 2020 Lloyds Bank GMP equalisation case (see above) confirmed his view that the Limitation Act does not apply to claims for pension arrears as they are claims to recover trust property. However, scheme forfeiture rules may limit such claims. Please click here for our review of the Axminister case in the July 2021 issue of Pensions Compass.
PPF compensation Hughes v PPF Court of Appeal, 19 July 2021The PPF and the DWP appealed the High Court decision in June 2020 that the PPF age cap is invalid and as to the High Court’s decision on the PPF’s methodology. See our “Hughes v Pension Protection Fund” article in September 2020 Pensions Compass. The appeal was heard on 4 and 5 May 2021 and judgment was given on 19 July 2021. Click here for our Podcast on the Appeal Court judgment.
FCA authorisation FCA v Avacade Court of Appeal, 4 August 2021On 30 June 2020 the High Court decided that the two unregulated introducer companies were in breach of Regulation 19 of the Financial Services and Markets Act 2020. The appeal was heard by the Court of Appeal on 7 July 2021. In an unanimous judgment on 4 August 2021, the Appeal Court upheld the High Court’s decision – click here for the article in the September 2021 Pensions Compass.
Improper investment Garner v Dalriada  On 23 June 2020 the Pensions Ombudsman held the sole Trustee of the Norton Motorcycles Pension Scheme personally liable for loss arising from the Trustee’s investment in Norton Motorcycles’ preference shares. Mr Garner as Trustee had failed to take proper advice and had not diversified the Scheme’s investments. Mr Garner was given permission to appeal part of the Pensions Ombudsman’s decision but subsequently withdrew his appeal. On 20 August 2021 TPR announced it is prosecuting Mr Garner for alleged criminal offences – click here for our article in the September 2021 Pensions Compass. The prosecution hearing will now take place at Derby Magistrates Court on 7 February 2022.
Incorrect amendments? Mitchells & Butlers Pension Plan High CourtWhether an amending deed adding the words in relation to pension increases “or any other rate decided by the principal employer” validly gave the principal employer this unilateral power. On 12 November 2021 the High Court decided the parties had not intended this as the power to switch index was originally vested in the plan trustee. The Court ordered the documents should be rectified (corrected) to restore the trustee’s power.

OTHER DEVELOPMENTS     
TopicEffect   
Superfunds – Further TPR GuidanceIn October 2020, TPR issued further Guidance on TPR’s expectations for transfers from DB schemes to Superfunds. See our article in the December 2020 Pensions Compass “Quick review of Superfunds“. Note – early legislation for Superfunds is no longer expected, see under Parliament – proposed legislation – in this issue of Pensions Compass. On 30 November 2021 TPR named Clara-Pensions as the first new DB consolidation structure (DB Superfund) to meet TPR’s standards.
Regulation of Pensions Tax Advice – HMRC’s proposalsIn November 2020, HMRC summarised responses to its March 2020 Consultation “Raising standards in the tax advice market”. On 23 March 2021, HMRC issued a Consultation on its proposal to require tax advisers to have appropriate professional indemnity insurance and on how to define “tax advice” for these purposes. The Consultation closed on 15 June 2021. On 30 November 2021 HMRC announced it has decided not to make professional indemnity insurance mandatory for tax advisers and instead it will consult further in 2022 on how to improve regulations around tax advice and how to define tax advice.
TPR’s June 2021 Interim Response to its January 2021 Funding Code of Practice ConsultationTPR is waiting for Government to consult on amendments to the Funding Regulations and expects to issue a further Consultation in early 2022 on its proposed new Funding Code of Practice. The Amending Regulations and the new TPR’s Code are not expected to come into force before late 2022 at the earliest.
PASA Guidance on GMP EqualisationThe Pensions Administration Standards Association has published the following during 2021: Guidance on tax issues, February 2021; Guidance on GMP Conversion, July 2021; Guidance on Transfers, August 2021. Whilst useful, the PASA Guides are not a substitute for legal and other professional advice.
TPR draft Single Code of PracticeOn 17 March 2021, TPR consulted on amalgamating its existing 15 individual Codes into a Single New Code. The Consultation closed on 26 May 2021. On 24 August 2021 TPR published its interim response. In light of the large number of comments received, TPR has not set a firm publication date for the new Single Code but does not expect to lay it in Parliament before Spring 2022 and therefore it is unlikely to be effective before Summer 2022. WB comment: this is a mammoth undertaking by TPR – hopefully a useful and more navigable single document will result.
TPR’s anti-avoidance powers under Pension Schemes Act 2021New contribution notice (“CN“) powers and new criminal offences: see TPR’s Code of Practice (with Guidance) re the new CNs and TPR’s Policy on Prosecution, both came into effect on 1 October 2021.
TPR Consultation on its policies under Pension Schemes Act 2021 anti-avoidance provisionsTPR’s Consultation relates to 3 matters: how it will exercise its powers where it has options under its anti-avoidance powers; its policy re its new higher penalty fines; and its policy re information gathering. The Consultation closes on 21 December 2021.
TPR – Annual Funding Statement 2021On 26 May 2021 TPR published its Annual Funding Statement. This is of relevance not only to employers and trustees with scheme valuation dates between 22 September 2020 and 21 September 2021, but also on more general issues including covenant assessment, affordability of contributions and corporate transactions.
UK Government Green Financing FrameworkOn 30 June 2021 the Treasury published its Framework document ahead of the issue of “Green” gilts in September 2021. Click here for the article in July 2021  Pensions Compass “Is Green investment legal?”.
Data Protection – Transferring Personal Data outside the UKOn 11 August 2021, the Information Commissioner’s Office issued a Consultation on new rules for transferring personal data outside the UK. The Consultation closed on 7 October 2021.
TPR’s views on trustees’ Climate Change obligationsIn September 2021 TPR published Guidance explaining TPR’s regulatory approach to trustees’ compliance with the Climate governance and reporting Regulations which came into force on 1 October 2021 (see under Parliament, recent legislation, in this issue of Pensions Compass).
Further Government Consultation on the DC pensions charge cap (currently 0.75%)On 27 October 2021 the Government announced this further Consultation. This follows on from a Working Group report that DC schemes tend to focus on cost saving rather than value and potential returns, due to the 0.75% cap on member‑borne charges.