Clive Weber, Consultant, Pensions & Employee Benefits Team. Please contact Clive with any queries on this Ready Reckoner.
| PARLIAMENT | ||
| Recent Legislation | Effective Date | Effect |
| Finance Act 2022 | 6 April 2022 | Various measures including: – Tax provisions to facilitate the transfer of dormant assets (see below). – 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; click here for the article in February 2022 Pensions Compass; our article in “Professional Pensions” can be viewed here. |
| Dormant Assets Act – Royal Assent 25/02/2022 | In stages | Aimed at reuniting individuals with their ‘lost’ financial assets including lost life insurance and retirement income policies, and where not possible, providing for the money to be used for social and environmental purposes. On 27th May 2022 certain parts of the Act were commenced. |
| Pension Schemes (Conversion of GMPs) Act 2022 – Royal Assent 28/04/2022 | Not yet in force | Will simplify GMP conversion once the relevant Regulations are in force. The DWP Consultation on the proposed Regulations is awaited. HMRC has issued limited guidance on tax treatment on conversion – click here for the article in this Pensions Compass. |
| DC schemes – Administration Investment, Charges & Governance Regulations | 1/10/2021 | Increased reporting obligations on DC scheme trustees; and changes to the permitted charging rules. |
| Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations | 30/11/2021 | Helping trustees spot and block transfer requests caused by scammers. Click here for our article in December 2021 Pensions Compass. DWP has agreed that references to overseas investments in the Regulations may need amending. |
| OPS & PP Regulations re Annual Statements | 1/10/2022 | Requirement to issue DC members in auto-enrolment arrangements with simpler, shorter annual benefits’ statement. |
| Occupational Pension Schemes – Collective Money Purchase Schemes Regulations 2022 | 1/8/2022 | Specifies the authorisation and supervisory regime for Collective Defined Contribution (CDC) schemes, under which scheme members share investment and longevity risk – Royal Mail employees are the first candidates. |
| Occupational Pension Schemes Regulations 2022 – Requirements to refer DC members to Guidance | 22/6/2022 (subject to Parliamentary approval) | Known as the “stronger nudge” initiative, trustees of relevant DC schemes must send more information to DC members to help ensure members receive relevant guidance before they can transfer or access their flexible DC benefits. Click here for our article in March 2022 Pensions Compass summarising the “stronger nudge” Regulations and giving practical tips for scheme trustees. |
| Proposed Legislation | Date | Effect |
| Online Safety Bill (re-published on 11/05/2022) | Autumn 2022? | Hopefully will make life harder for pension scammers and other fraudsters. See also the Conditions For Transfers Regulations above. The first and second Readings of the Bill in the House of Commons occurred on 11/05/2022. |
| Boycotts, Divestment and Sanctions Bill | Publication later in 2022 | Measures to ensure public bodies (including it seems the Local Government Pension Scheme) carry on procurement and investment activities in line with Government policy. |
| Governance and Registration Amendment Regulations re Investment Consultants and Fiduciary Managers | Published 6 June 2022 and expected to come into force on 1 October 2022 | Alignment of pensions legislation with the Competition & Markets Authority Order 2019. The original DWP consultation closed on 2 September 2019. At long last, Government has published its response and laid proposed Regulations before Parliament. Subject to Parliamentary approval, it is anticipated the Regulations will come into force on 1 October 2022. |
| Notifiable Events Amendment Regulations (DB schemes) | Delayed, Autumn 2022? | New events to be notified to TPR and in certain cases to scheme trustees (change in control of an employer, sale of material proportion of business or assets and/or granting of certain security rights). DWP’s Consultation on these proposed Regulations closed on 27 October 2021 and DWP’s response is overdue. The timing and content of the notifications are controversial – click here to listen to our December 2021 Podcast. |
| Climate Change | (1) Treasury paper 18/10/2021 “Greening Finance” (2) (DWP Consultation 1/10/2021 (closed 6/01/2022) On 17/6/22 the DWP announced the finalisation of the amending Regulations and the Guidance, to come into force on 1/10/2022 as expected. | (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 disclosures already required for the largest schemes. (2) Proposed Regulations to amend the existing Climate Change Regulations (which came into force 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 requirement will apply from 1/10/2022. Click here for the article in December 2021 Pensions Compass. The DWP Consultation includes draft Guidance explaining the metrics and the alignment process. Other matters in the DWP Consultation: In relation to trustees’ stewardship of scheme investments, 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. |
| Draft Extension of Automatic Enrolment Bill | Introduced in Parliament on 05/01/2022 | Private Member’s Bill to extend AE to all jobholders aged at least 18 (presently age 22 minimum) and to remove the lower qualifying earnings threshold. The Bill did not progress sufficiently in the last Parliament. The Minister has not ruled out future legislation on these topics. |
| Indicative draft Pensions Dashboard Regulations 2022 | Consultation published 31/01/2022 | The DWP’s Consultation closed on 13 March 2022. It is envisaged that large schemes (minimum 1000 active/deferred members) will need to connect to the Dashboard between April 2023 to September 2024, with a timetable in 2024/2025 and onwards for smaller schemes. The requirements for scheme trustees to co-operate with and connect to the dashboard and the data to be provided are specified in the draft indicative Regulations. Click here for the article in March Pensions Compass on key legal concerns. |
FORTHCOMING COURT DECISIONS – CASES PENDING/JUDGMENTS AWAITED | |
| Topic | Effect |
| RPI/CPIH Judicial Review | On 9 April 2021, the Ford, M&S and BT pension schemes announced they were applying for permission to bring judicial review proceedings against the Government re the Government’s decision on 25 November 2021 to align the basis of RPI with CPIH from 2030 and without any compensation. Click here to see our article in December 2020 Pensions Compass “RPI – light at the end of the tunnel”. On 22 December 2021, the High Court gave permission for the judicial review, which commenced to be heard on 21 June 2022. |
FROM THE COURTS – RECENT DECISIONS | |
| Topic | Effect |
| 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”. |
| Limitation and forfeiture ‘Axminister’ Penson Pension High Court, 17 June 2021 | The 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 2021 | The 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. Click here for 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 2021 | 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 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 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 was due to take place at Derby Magistrates Court on 7 February 2022 but was postponed. At the subsequent prosecution hearing, Mr Garner was sentenced to eight months’ imprisonment suspended for two years. We understand he was declared bankrupt in May 2021. |
| Incorrect amendments? Mitchells & Butlers Pension Plan High Court, 12 November 2021 | Whether an amending deed placing the power to decide the Index for pension increases in the principal employer in place of the trustees was valid. The High Court decided the parties had not intended to change the power to switch index which was originally vested in the plan trustee. The Court ordered the documents should be rectified (corrected) to restore the trustee’s power, and rejected the principal employer’s argument that, as the successor principal employer, rectification could not apply to it. Click here for the article in February 2022 Pensions Compass and here for our Podcast. |
| Late notification for Fixed Protection 2012 Executors of Harrison v HMRC Upper Tribunal, 27 October 2021 | The First-Tier Tribunal dismissed the taxpayer’s appeal on 3 February 2020. The taxpayer (through his executors) appealed to the Upper Tribunal. The appeal was dismissed by the Upper Tribunal. The rules for late notification of Fixed Protection differ from the late claim rules for Primary or Enhanced Protection. |
| Late application for enhanced and primary protection Ketley v HMRC Upper Tier Tribunal, 1 September 2021 | 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. The taxpayer appealed to the UpperTier Tribunal (UTT) which dismissed the taxpayer’s appeal – the 10 month delay in making a late notification was too long. |
| Interpreting Revaluation provisions De La Rue Pension Scheme High Court, 14 January 2022 | The High Court decided the employer’s interpretation of the Scheme’s revaluation rule for deferred pensions – revaluation in line with minimum statutory requirements – was the preferred interpretation – another reminder to ensure clarity in scheme rules. |
| Death Benefits Punter Southall v Benge and Barrett High Court, 1 February 2022 | The independent trustee concluded, having obtained supportive legal advice, that a luxurious lifestyle with the deceased member did not prevent the claimant being dependent on the deceased member for the “necessaries” of life. The High Court approved the trustee’s decision. Click here for the article in March 2022 Pensions Compass. |
| Bankruptcy Trustees in Bankruptcy v McNamara High Court, 15 February 2022 | The High Court decided in favour of the bankrupt member, an Irish citizen made bankrupt in England. The Court decided his pension rights under an Irish pension scheme were beyond the reach of his Trustee in Bankruptcy. Click here for the article in this Pensions Compass. Wedlake Bell acted for the pension scheme trustees. |
| TPR fixed penalty notices Ease & Co v TPR First-Tier Tribunal, 31 January 2022 | The First Tier Tribunal dismissed the company’s appeal against TPR’s fixed penalty notice for the company failing to prepare its scheme’s annual governance statement, as the company’s lack of knowledge of the statutory requirement was not a reasonable excuse. |
| TPR escalating penalty notice Davey West Ltd v TPR First Tier Tribunal, 10 February 2022 | TPR’s Unpaid Contributions Notice lead to TPR issuing a fixed penalty notice and subsequently an escalating penalty notice, for failure to pay auto-enrolment contributions for a 6 month period. The First Tier Tribunal found that TPR’s communications had been correctly addressed, and that the company’s problems with its pensions provider were not reasonable excuses; the penalty notices were upheld. Click here for the article in February 2022 Pensions Compass (the review and appeal process) and here for the article in this Pensions Compass on recent cases in the First Tier Tribunal where the employer’s defence of reasonable excuse also failed (Kingswear Gallery v TPR and Morecombe Bay Wines v TPR). |
| TPR contribution notice (“CN”) Dosco Pension Scheme | In its Regulatory Report published on 31 March 2022, TPR reported on the CN issued in August 2021 against the scheme’s former Germany parent company. Besides demonstrating the reach of TPR beyond the UK, this is the first example of a CN amount including amounts in respect of lost investment returns and interest aimed at compensating the UK pension scheme for being short-changed. Click here for the article in this Pensions Compass. |
| Whether actuarial Valuation valid and other matters McGaughey & Davies v Trustee of Universities Superannuation Scheme (USS) High Court | Application 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. On 24th May 2022 the High Court refused permission for the claims to be pursued. |
OTHER DEVELOPMENTS | |
| Topic | Effect |
| DWP | |
| DWP Consultation on DC schemes investing in “illiquid assets” | This Consultation opened on 30 March 2022 and closed on 11 May 2022. The Government will decide shortly whether to require trustees of relevant DC schemes to specify in their Statement of Investment Principles the trustees attitude to investing in “illiquid assets” – not a duty so to invest but a duty to consider. Issues include how to define “illiquid assets”. |
| TPR | |
| TPR’s June 2021 Interim Response to its January 2021 Funding Code of Practice Consultation | TPR is waiting for Government to consult on amendments to the Funding and Investment Regulations. TPR’s Consultation is expected in late Summer 2022 on its proposed new Funding Code of Practice. Amending Regulations and the new TPR’s Code are not expected to come into force before late 2022 at the earliest. |
| TPR draft Single Code of Practice | On 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 to be laid in Parliament. It is unlikely to be effective before Autumn 2022. WB comment: this is a mammoth undertaking by TPR – hopefully a useful and more navigable single document will result. |
| TPR updated Policies on its enforcement powers under Pension Schemes Act 2021 | In May 2022 TPR issued: a consultation on its proposed Enforcement and Prosecution Policies (Consultation closed 24th June 2022); and finalised Policies on High Fines (up to £1 million). |
| TPR’s views on trustees’ Climate Change obligations | In December 2021 TPR finalised its Guidance on TPR’s approach to trustees’ compliance with the Climate Governance and Reporting Regulations which came into force on 1 October 2021. TPR’s Guidance should be read alongside the DWP’s statutory guidance published in July 2021. See under Parliament – proposed legislation – in this issue of Pensions Compass for further proposed climate change Regulations. |
| Conflict in Ukraine – TPR Guidance | TPR Guidance for trustees from the investment and employer covenant perspective on events in Ukraine. Click here to read our article in March 2022 Pensions Compass. |
| TPR Warning Notice ITV | ITV in its trading update for the three months to 31st March 2022, mentioned it has received a £133 million Warning Notice following the ‘Box Clever’ litigation. ITV disputes the amount specified in the Warning Notice. |
| HMRC | |
| Regulation of Pensions Tax Advice – HMRC’s proposals | On 23 March 2021 HMRC proposed that all tax advisers should have mandatory professional indemnity insurance, and how to define “tax advice” for these purposes. The Consultation closed on 15 June 2021. Subsequently HMRC announced it would not pursue mandatory insurance. HMRC continues to consider how best to protect consumers and to regulate tax advisers. It is expected HMRC will consult on its preferred option later this year. |
| HMRC Newsletter on GMP Equalisation and Tax | HMRC’s Newsletter of 6 April 2022 gives some guidance on the tax treatment of Transfer Top – ups. This includes where a Top – up is paid direct to a member as a lump sum. Some modest guidance on GMP conversion is also included. Click here for the article in this Pensions Compass. |
| Information Commissioner’s Office | |
| ICO’s Consultation on transferring personal data outside the UK | On 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. On 2 February 2022 the Secretary of State laid various documents in Parliament relating to international data transfers. |