Pensions Ready Reckoner March 2021

22 / 03 / 2021

PARLIAMENT

Recent LegislationDateEffect
Pensions Schemes Act 2021    Royal Assent 11/02/2021The Act will come into effect in stages once ancillary Regulations have been made and brought into effect. The key changes are described in the following articles in this issue of 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 2020Royal Assent 22/07/2020Tapering of annual allowance – relaxations
Corporate Insolvency and Governance Act 2020Royal Assent 25/06/2020Introduces new Moratorium provisions and a new Restructuring Plan, continuation of certain contracts, and changes to wrongful trading law. For impact on DB schemes, click here to our “Pension deficits regulated” article in July 2020 Pensions Compass.
Proposed LegislationDateEffect
Finance Bill 2020 – 2021    Royal Assent expected July 2021Provisions for schemes providing collective money purchase benefits to be treated as registered pension schemes for tax purposes.
Budget 202103/03/2021The lifetime allowance is to be frozen at its current level of £1,073,100 until April 2026 – disappointing for affected members.

Money Laundering and Terrorist Financing Regulations 202006/04/2021 (part)
06/03/2022 (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.
Draft Climate Change Amendment Regulations 202101/10/2021Specifies matters on which trustees of certain (large) occupational pension schemes are required to have knowledge and understanding – click here for the article in this issue.
Draft Governance and Amendment RegulationsDelayedRegulations 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 57Draft legislation expected Summer 2021 (legislation to be in Finance Bill 2022)The Treasury and HMRC joint Consultation opened on 11 February 2021 and closes on 22 April 2021.
SuperfundsBy 2024Proposed 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 he did not rule out a Bill before the next general election in 2024. Meanwhile TPR’s interim regime for Superfunds continues.

FORTHCOMING COURT DECISIONS    

TopicEffect   
Incorrect amendments? Axminster Carpets High Court, March 2021Does the absence of confirmation under section 37 Pension Schemes Act 1993 (that the “reference scheme” contracting-out test would be met notwithstanding the amendments) invalidate the amendments?
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.
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 is due to be heard by the Court of Appeal on 7 July. 
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 is due to be heard on 4 May 2021.
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 2 July 2020 Mr Garner applied to appeal the High Court decision.
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, date to be fixed. The rules for late notification of Fixed Protection differ from the late claim rules  for Primary or Enhanced Protection – see Gibson v HMRC below under Recent Decisions.

FROM THE COURTS 

TopicForthcoming decisions 
RPI/CPI Britvic plc v Britvic Pensions Court of AppealOn 17 January 2020 the High Court held that based on the wording of the scheme rules Britvic plc could not reduce the rate of increases for pensions in payment and a change could produce upward increases only. Britvic plc’s appeal is due to be heard on 12 or 13 May 2021. 
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. Due for hearing June/July 2021.
Transfer right? Gerard Rowe v Aviva Life and Pensions UK Ltd High CourtWhether Aviva can properly refuse a transfer request. Hearing date not yet fixed.

FROM THE COURTS    

TopicRecent decisions
Rectification SPS Technologies High Court, 11 September 2020Successful 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 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.

FROM THE COURTS    

TopicRecent decisions   
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
The First Tier Tribunal decided that the taxpayer had a reasonable excuse for failing to meet the 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.

OTHER DEVELOPMENTS

TopicEffect   
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.
RPI – HM Treasury and UKSA Response to Consultation
 Stop Press – Judicial Review?
On 25 November 2020, the Chancellor of the Exchequer explained plans to reform RPI, in light of their earlier Consultation. Please see our article in the December 2020 Pensions Compass “RPI – light at the end of the tunnel?“. The Trustees of 3 schemes are considering whether a Court application for judicial review of the Government’s proposals to adopt CPIH data and methods for RPI. The deadline for filing any such claim for judicial review is 7 April 2021.
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 proposalsNovember 2020 – HMRC have summarised responses to its March 2020 Consultation “Raising standards in the tax advice market”. On 23 March 2021 HMRC issued a consultation on requiring tax advisers to have appropriate professional indemnity insurance and on how to define “tax advice” for these purposes. The consultation was until 15 June 2021.
TPR Interim Response to Funding Code of Practice Consultation – DB FundingJanuary 2021 – TPR sets out its interim reviews 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.
PPF – Levy RulesJanuary 2021 – The PPF published its final Levy Rules for 2021/2022 PPF levies.
PASA Guidance on Tax and GMP EqualisationIn February 2021 the Pensions Administration Standards Association published its Guidance on tax issues on GMP equalisation.