Pensions: What's new this week - January 2021

Allen & Overy LLP

Allen & Overy LLP

2021: key agenda items for UK pension schemes and sponsors

We invite you to spend five minutes with members of our Pensions team as they talk about the key legal developments that will shape the first few months of 2021 for UK pension schemes and their corporate sponsors. Watch our short video here – and if you would like to discuss any of the topics in more depth, please do get in touch.

Brexit: end of transitional implementation period, new guidance

The transitional period for the implementation of the UK’s withdrawal from the European Union has now ended, and the UK and EU have reached a number of agreements on their future relationship.

Trustees and sponsors will have been working with professional advisers for some time to monitor and manage risks associated with the Brexit transition (including in relation to investments, sponsor covenant and data protection). The Information Commissioner’s Office has recently updated its GDPR guide for the UK GDPR, including new guidance on international data transfers after the end of the Brexit implementation period, and has published a press release welcoming transitional arrangements on international transfers of personal data to/from the EEA.

The Pensions Regulator (TPR) has updated the covering note to its guidance for cross-border schemes to reflect the end of the implementation period – it plans to revise the existing guidance in early 2021 to address how trustees of schemes that were previously authorised and approved to operate cross-border should manage the cross-border aspects of their schemes in the post-transition period. TPR is advising trustees to periodically check its guidance page, and to check with the relevant EU authority, for further updates.

TPR bans corporate trustee and director, appoints independent trustee

The Determinations Panel of TPR has banned a corporate trustee and one of its directors from acting as pension scheme trustees due to multiple governance failures in relation to a pension scheme, including: failure to resolve issues with the scheme’s HMRC registration; investment-related issues (failure to take investment advice and to act prudently, failure to diversify investments); failure to comply with requirements for member transfers; and failure to comply with statutory demands for information by TPR (section 72 notices). The Panel also appointed an independent trustee to the scheme.

The corporate trustee (Audax) was the trustee of a small DC scheme (as at 2018, it had approximately £1.2 million in assets and 38 deferred members). The principal employer was dissolved in 2018, but the scheme had not been wound up. HMRC and TPR had been engaging with the corporate trustee since 2017 (when HMRC notified it that the scheme’s registration would be withdrawn on the grounds that the scheme administrator was not a fit and proper person).

The Panel was satisfied that the director and corporate trustee were not fit and proper to act as trustees, and that in some statements to TPR and scheme members, the director had also shown a lack of integrity. It considered the cumulative breaches of trust and pensions law over a number of years to be serious enough to warrant prohibition from acting as a trustee in relation to both this scheme and trust schemes generally.

In a separate, but related, decision, the Panel also appointed an independent trustee to the Ploutos Pension Trust and Ganita Wealth Pension Scheme. Read TPR’s press release on these decisions here.

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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