| PARLIAMENT | ||
| Recent Legislation | Date | Effect |
| Pensions Schemes Act 2021 | Royal Assent 11/02/2021 | The Act applies in stages once ancillary Regulations have been made and brought into effect in October 2021 and April 2022. The key changes are described in the following articles in March 2021 Pensions Compass: • Click here for climate change • Click here for TPR’s new anti-avoidance powers and the new criminal offences • Click here for other key changes |
| Finance Act 2021 | Royal Assent 10 June 2021 | (1) Provisions for collective defined contribution schemes (introduced under Pension Schemes Act 2021) to be treated as registered pension schemes for tax purposes. (2) The lifetime allowance to be frozen at its current level of £1,073,100 until April 2026 |
| Climate Change Governance and Reporting Regulations 2021 and Miscellaneous Amendment Regulations 2021 | Regulations published on 8 June 2021 and have effect 1 October 2021. | For large pension schemes, detailed Regulations relating to governance and reporting on climate change matters; consequential amendments to the Disclosure regulations. Click here for the article in this issue of Pensions Compass. On 8 June 2021, the Department of Work and Pensions published its draft Statutory Guidance on governance and reporting on climate change, for trustees of occupational pension schemes. |
| Proposed Legislation | Date | Effect |
| Online Safety Bill | Bill published 12 May 2021 | Following adverse comment, on 13 May 2021 the Government announced the Bill will also bring “user-generated fraud into the scope of the regulatory framework”. Wedlake Bell comment: hopefully this will make life more difficult for pension scammers, also see next item. |
| Pension scams – conditions for transfers | Consultation on draft Regulations 14 May 2021 | The long awaited restrictions on transfers, to counter pension scams. The consultation closed on 10 June 2021. Expected effective date for the finalised Regulations is 1 October 2021. |
| Money Laundering and Terrorist Financing Regulations 2020 | 06/04/2021 (part) 10/03/2022 (fully) | Among other changes, registered pension schemes and certain other arrangements do not have to register under HMRC’s Trust Registration Service but certain other unregistered pension schemes are required to register. |
| Proposed Legislation | Date | Effect |
| Draft Governance and Amendment Regulations | Delayed, expected in first half of 2022 | Regulations to align pension legislation with the Competition & Markets Authority Order 2019 relating to investment consultants and fiduciary managers. |
| Increase in Normal Minimum Pension age from 55 to 57 | Draft legislation expected Summer 2021 (legislation to be in Finance Bill 2022) | The Treasury and HMRC joint Consultation opened on 11 February 2021 and closed on 22 April 2021. On 20 July 2021 the Treasury published its response: MPA will rise to age 57 on 6 April 2028 but with some transitional provisions. |
| Changes to DC legislation | Expected 5 October 2021 | On 21 June 2021 the Government published its proposed amendments to various Regulations affecting defined contribution schemes including scheme administration, disclosure changes and governance and investment. Statutory guidance will clarify how costs and charges information should be included. |
| Superfunds | By 2024 | Proposed legislative basis for Superfunds and their authorisation. On 12 February 2021 the Pensions Minister announced that a Pensions Bill for Superfunds would not be included in the Bills to go before Parliament this year, but did not rule out a Bill before the next general election in 2024. Meanwhile TPR’s interim regime for Superfunds continues. |
| Regulations under Pension Schemes Act 2021 relating to TPR anti-avoidance powers | ||
| Proposed Legislation | Date | Effect |
| (1) Draft Pensions Regulation Contribution Notices Regulations 2021 | Expected 01/10/2021 | On 18 March 2021, DWP issued draft Regulations for Consultation. The Consultation closed on 29 April 2021. The Regulations detail the “employer resources test” for TPR’s new anti-avoidance powers – click here for the article in March 2021 Pensions Compass. In June 2021 the DWP published its response and issued revised draft Regulations regarding the employer resources test. Despite criticism, the test is similar to first drafted. |
| (2) Information Gathering Powers Regulations 2021 | Made 23/06/2021 Coming into force 01/10/2021 | The DWP’s Consultation on 18 March 2021 (mentioned above) also consulted on these new Regulations which extend TPR’s interview and inspection powers and introduce penalties for non-compliance. These Regulations have been finalised and made (SI 2021/754). |
| FORTHCOMING COURT DECISIONS – JUDGMENTS AWAITED | |
| Topic | Effect |
| FCA authorisation FCA v Avacade Court of Appeal | On 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 due to be heard by the Court of Appeal on 7 July 2021 and judgment is awaited. |
| RPI/CPIH Judicial Review | On 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”. |
| Improper investment Garner v Dalriada Court of Appeal? | 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. On 20 July 2020 Mr Garner applied to appeal the High Court decision. |
| Late notification for Fixed Protection 2012 Executors of Harrison v HMRC | The 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 differ as between types of Protection – see Gibson v HMRC and Gammell v HMRC below under Recent Decisions. |
| Late application for enhanced and primary protection Ketley v HMRC | The 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. |
| Incorrect amendments Mitchells & Butlers High Court | Whether 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. Hearing was due on 30 June 2021, judgment awaited. |
| FROM THE COURTS | |
| Topic | Recent decisions |
| Rectification SPS Technologies High Court, 11 September 2020 | Successful application for correction of scheme rules by the quick summary judgment route. Please see our article “Rectification of errors in your scheme documents” in September 2020 Pensions Compass and our article published in the November 2020 edition of Pensions Today. |
| GMP sex equalisation Lloyds Bank High Court, 20 November 2020 | In 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 |
| Fraud Compensation Fund PPF v Dalriada Trustees High Court, 6 November 2020 | The High Court decided several matters relating to how the PPF should operate the Fraud Compensation Scheme. |
| Time limit for claiming Primary or Enhanced Protection for lifetime allowance Gibson v HMRC First-Tier Tribunal, 3 November 2020 and Gammell v HMRC First-Tier Tribunal, 24 February 2021 | 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. This is a developing legal area and advice is essential. |
| SIPP residential investment – Trustee duties Cunningham v Namulas Pension Trustees Scottish Court of Session, 18 December 2020 | Whether Trustee has duty to avoid triggering a tax charge. Click here to see article in May 2021 Pensions Compass entitled ‘Medley of Case Law’. |
| Transfer to Gibraltar QROPS – liability Burns v Burns High Court, 18 January 2021 | Whether 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 2021 | Whether 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 2021 | Whether 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 for the article in May 2021 Pensions Compass. Apparently the SIPP provider is seeking to appeal to the Supreme Court. |
| RPI Britvic v Britvic Pensions Court of Appeal, 10 June 2021 | On 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”. See the article in this Pensions Compass – ‘A Juicy Tale of Interpretation!’ |
| Limitation and forfeiture ‘Axminister’ Penson Pension High Court, 17 June 2021 | The same Judge as in the Lloyds Bank GMP equalisation case (see above) confirmed the Limitation Act does not apply for pension arrears as they are claims to recover trust property. However, scheme for Section rules may limit such claims – click here for our review of the Axminster case in this Pensions Compass. |
| PPF compensation Hughes v PPF Court of Appeal | The PPF and the DWP have 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 – we will report on the Court of Appeal judgment in detail in our September 2021 edition of Pensions Compass. Meanwhile, click here for our podcast on the Court of Appeal judgment. |
| OTHER DEVELOPMENTS | |
| Topic | Effect |
| TPR Guidance to Trustees – “Protecting schemes from sponsoring employer distress” | On 12 November 2020, TPR issued new Guidance to trustees regarding the profound effect of COVID-19 on many businesses, and also highlights TPR’s expectations of trustees in the context of corporate transactions. |
| Superfunds – Further TPR Guidance | In 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. |
| Regulation of Pensions Tax Advice – HMRC’s proposals | In 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. There are many unregulated “tax advisers” and HMRC continues to consider the best approach to protect consumers. |
| TPR Interim Response to Funding Code of Practice Consultation – January 2021 | TPR sets out its interim views and promises a further Consultation on its Funding Code of Practice. The Code together with separate provisions in Pension Schemes Act 2021 (relating to trustees having a funding and investment strategy and preparing a written statement) are unlikely to come into force until April 2022 at the earliest. |
| PASA Guidance on Tax and GMP Equalisation | In February 2021 the Pensions Administration Standards Association published its Guidance on tax issues on GMP equalisation. In July 2021 PASA published Guidance on GMP Conversion. |
| TPR draft Single Code of Practice | On 17 March 2021, TPR issued a Consultation on amalgamating its existing 15 individual Codes into a Single New Code. The Consultation closed on 26 May 2021. WB comment: this is a mammoth undertaking by TPR – hopefully a useful and more navigable single document will result eventually. |
| TPR and FCA – FCA Regulation | Useful updated Guidance for employers and trustees re their support for members on financial matters without needing FCA authorisation. |
| TPR’s anti-avoidance powers under Pension Schemes Act 2021 | New contribution notice (“CN”) powers – on 27 May 2021 TPR consulted on changes to its existing Code of Practice No. 12 relating to how it will apply its new CN powers once they come into force in (probably) October 2021, including consulting on new Code-related Guidance giving practical examples. The Consultation closed on 7 July 2021. |
| TPR’s views on trustees’ climate change obligations | 1) on 7 April 2021 TPR published its strategic response to climate change and how TPR can assist scheme trustees to meet their obligations; and (2) on 12 July 2021 TPR published draft Guidance explaining TPR’s regulatory approach to trustees’ compliance with the governance and reporting Regulations coming into force on 1 October 2021– see under Parliament recent legislation, in this issue of Pensions Compass. |
| TPR – Annual Funding Statement 2021 | On 26 May 2021 TPR published its Statement of relevance not only to employers and trustees with scheme valuation dates between 22 September 2020 and 21 September 2021, but also on a range of more general issues including covenant assessment, affordability of contributions and corporate transactions. |
| UK Government Green Financing Framework | On 30 June 2021 the Treasury published its Framework document ahead of the expected issue of “Green” gilts in September 2021. Click here for the article in this issue of Pensions Compass “Is Green investment legal?” |