Here is our brief weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.
The Pensions Regulator’s updated defined contribution guidance highlights that trustees should assess whether the temporary closure of a fund (e.g. a property fund) could result in the creation of a default fund where member contributions are re-directed to an alternative fund. A default fund is subject to specific legal requirements, such as a cap on charges (where the scheme is used for automatic enrolment) and a requirement to have a separate statement of investment principles. The assessment will depend on how members made their investment choice. We recommend that trustees take legal advice if they are affected by a temporary fund closure.
On 20 May, the government introduced a new corporate insolvency and governance bill. The bill will introduce the following measures:
Temporary relaxation on Companies House filing requirements and the holding of annual general meetings – these may be held behind closed doors.
New corporate restructuring tools to give companies the time they need to maximise their chance of survival, including prohibiting the use of termination clauses that engage on insolvency and prohibiting creditors from filing statutory demands and winding up petitions for coronavirus related debts.
Temporary suspension of parts of insolvency law to support directors during the current time, including removing the threat of personal liability for wrongful trading.
The above measures aim to result in a stronger employer in most cases. There will be some pension funds that could be adversely affected by these measures if the employer ultimately fails, after having further reduced the assets available to unsecured creditors such as pension schemes. The bill is currently progressing through parliament. We recommend taking legal advice about how the new legislation may affect a pension scheme if there are concerns about its sponsoring employer’s covenant.
On 20 May the Chancellor made a further Treasury Direction reflecting the extension to the Coronavirus Job Retention Scheme and clarifying some provisions within the original Direction. The new Direction also confirms the circumstances where a furloughed employee can continue to act as a pension scheme trustee.