Pensions: What's new this week - February 2021

Allen & Overy LLP

Allen & Overy LLP

TPR: latest survey of DC schemes

The Pensions Regulator (TPR) has published its latest survey of DC schemes, plus a press release calling for DC trustees to pay greater attention to the climate change related risks and opportunities facing their schemes.

TPR will publish a strategy shortly setting out how it will help trustees to meet challenges around climate change.

The survey covers a range of issues including consideration of climate issues, investment governance and value for members requirements. On cybersecurity, just under 10% of schemes (44% of master trusts) reported experiencing some form of cyber attack or breach in the previous 12 months. The most common breach/attack was staff contact with fraudulent emails/websites; the most common impacts were software or systems being corrupted or damaged. The survey (conducted in Q1 2020) also includes sections on administration (including methods of measuring administrator performance) and experience of TPR interactions and interventions.

View the press release.

View the survey results.

Assessing climate competency of investment consultants: new guide

A new guide has been published to help trustees assess the climate competency of investment consultants, with examples of positive and best practice indicators for each of the following themes:

  • firm-wide climate expertise and commitment;
  • individual consultant climate expertise;
  • tools and software;
  • thought leadership and policy advocacy; and
  • assessment of investment managers and engagement with them.

The guide was prepared by the Investment Consultants Sustainability Working Group, with input from parties including the Pensions Regulator, the UN PRI and ShareAction.

Read the guide.

PPF levy ceiling and compensation cap 2021/22

The latest Pension Protection Fund (PPF) order sets the levy ceiling at £1,099,445,505 for the year starting on 1 April 2021. The compensation cap remains at the level specified in last year’s order (£41,461.07).

Last year in Hughes v PPF, the High Court ruled that the PPF compensation cap was discriminatory on age grounds contrary to EU law, and that the relevant provisions in the Pensions Act 2004 must be disapplied: read our summary. The appeal by the government and the PPF against that ruling is due to be heard in May 2021.

Read the levy ceiling order.

Latest HMRC newsletter

HMRC’s latest Pension Schemes Newsletter (no. 127) includes an update on the Managing Pension Schemes service and information on notification of residency status reports for schemes operating relief at source. 

Read the newsletter.

PPF consults on valuation assumptions

The PPF is consulting on changes to the assumptions for section 143 and section 179 valuations to bring them into line with current market pricing in the bulk annuities market. The PPF estimates that the changes would improve the aggregate funding ratio, moving 261 schemes from deficit to surplus, and reducing the deficit of other schemes (from £253 billion to £204 billion). It proposes to introduce the revised assumptions for valuations with an effective date on or after 1 May 2021. The consultation closes on 18 March 2021.

View the consultation document.

Public sector pensions: discrimination update

The government has confirmed its approach to remedy discrimination in major public sector pension schemes (such as the Civil Service and NHS schemes), following the 2018 Court of Appeal decision in McCloud. These plans are explained in a response to a consultation published last year, and will require primary legislation. 

  • The legacy schemes will close to future accrual on 31 March 2022. 
  • At the point of taking benefits, eligible members will choose between legacy or reformed pension scheme benefits in respect of service between 1 April 2015 and 31 March 2022 (called the deferred choice underpin).

Processes will be developed for members who retire before the introduction of the underpin. 

A separate plan for the Local Government Pension Scheme will be published later this year.

View the consultation response.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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