Part 7 – Pensions Ready Reckoner

23 / 09 / 2021

Clive Weber, Consultant, Pensions & Employee Benefits Team. Please contact Clive with any queries on this Ready Reckoner.

PARLIAMENT
Recent LegislationDateEffect
Pension Schemes Act 2021    Royal Assent 11/02/2021The 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 Many of the changes take effect on October 2021Click here for the “All Change” article in this Pensions Compass and here for Climate Change Update.
Finance Act 2021Royal Assent 10 June 2021Provisions for collective defined contribution schemes (introduced under Pension Schemes Act 2021) to be treated as registered pension schemes for tax purposes.The lifetime allowance to be frozen at its current level of £1,073,100 until April 2026.
DC Schemes – Administration, Investment, Charges and Governance RegulationsEffective date:
1 October 2021
Value, costs and charges for DC schemes are brought under greater scrutiny by increased reporting obligations on trustees; and changes to permitted charging structures.
Proposed LegislationDateEffect
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“. WB comment. Hopefully this will make life more difficult for pension scammers, also see next item.
Pension scams – restrictions on transfersConsultation on draft Regulations 14 May 2021The 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 202006/04/2021 (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.
Dormant Assets BillAnnounced on 11 May 2021The Dormant Assets Scheme will be expanded to include “lost” assets in the insurance and pensions sectors.
Social Security (Up-Rating of Benefits) BillBill published 8 September 2021State pensions – suspends the triple lock mechanism and omits the earnings link for the 2022/2023 tax year.
Draft Governance and Amendment Regulations re Investment Consultants and Fiduciary ManagersDelayed, expected in first half of 2022Regulations to align pension legislation with the Competition & Markets Authority Order 2019 .
Increase in Normal Minimum Pension Age from 55 to 57 Legislation to be included in  Finance Bill 2021/2022The Treasury and HMRC joint Consultation opened on 11 February 2021 and closed on 22 April 2021. On 20 July 2021 the Government announced that it was proceeding with the increase in NMPA to age 57 to take effect from 6 April 2028; there will be exceptions for certain public service scheme members and for those with a protected pension age.
SuperfundsBy 2024Superfunds 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.

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.
Incorrect amendments? Mitchells & Butlers 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. Hearing was due on 30 June 2021, judgment 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.

FROM THE COURTS    
TopicRecent decisions
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 articleTransfers and GMP Equalisation – Clarity at last?” in December 2020 Pensions Compass.
Fraud Compensation Fund PPF v Dalriada Trustees High Court, 6 November 2020The 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 2020Whether Trustee has duty to avoid triggering a tax charge. Click here to see article in this Pensions Compass.
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 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’ Pension High Court, 17 June 2021The same Judge as in the 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 this issue of Pensions Compass.
PPF compensation Hughes v PPF Court of AppealThe 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 Fundarticle 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.
FCA authorisation FCA v Avacade Court of AppealOn 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 this 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 this Pensions Compass.

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.
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. There are many unregulated “tax advisers” and HMRC continues to consider the best approach to protect consumers.
TPR’s Interim Response to its January 2021 Funding Code of Practice ConsultationTPR sets out its interim views and promises a further Consultation later in 2021 on its Funding Code of Practice. The Code together with separate provisions in Pension Schemes Act 2021 (relating to trustees’ funding and investment strategy and preparing a written statement) are unlikely to come into force until April 2022 at the earliest.
PASA Guidance on GMP EqualisationIn February 2021 the Pensions Administration Standards Association published its Guidance on tax issues on GMP equalisation, and in August 2021 published Guidance on transfers and GMP equalisation. 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 and FCA – FCA RegulationUseful 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 2021New 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 (now 1st October 2021) including consulting on new Code-related Guidance giving practical examples. The Consultation closed on 7 July 2021 and finalisation is awaited. Finalisation of TPR’s Prosecution policy re the new criminal offences is also awaited.
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 (which come into force on 1 October 2021 – see under Parliament, recent legislation, in this issue of Pensions Compass).
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 expected 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 closes on 7 October 2021.