Pensions Weekly Update – 6 May 2020

May 2020

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 Pension Protection Fund (PPF) has issued a statement to reassure levy payers that the impact of COVID-19 on the amount of PPF levy collected in respect of 2020/21 will be minimal for two reasons. First, the levy rules were already fixed prior to the crisis and, second, the information that is used to calculate the levy was largely collected before the economic impact of COVID-19 became significant. The PPF has confirmed that the maximum amount of levy will be 0.5% of liabilities.
  • The Pensions Regulator (TPR) has issued guidance on member communications, urging pension schemes to keep members fully informed of delays to processes and changes to services during the pandemic. For the foreseeable future, a standard letter jointly from TPR, Financial Conduct Authority and The Money and Pensions Service should be issued to all members who request a cash equivalent transfer value (CETV) quote, warning against scams, giving up defined benefit predictability and PPF protection. Trustees should also actively monitor the number of requests for CETV quotes and which financial advisers are supporting member requests. Any unusual or concerning patterns, such as spikes in CETV requests, or the same adviser across a multitude of requests, should be notified to the Financial Conduct Authority.
  • HMRC has issued Pension Schemes Newsletter 119. This publication contains useful information for pension trustees and administrators who are taking actions that require a valuation of pension scheme assets, such as testing against the lifetime allowance when a member designates funds for drawdown. Recognising difficulties in obtaining asset valuations, HMRC says that it will not issue any notices to file pension scheme returns for 2019/20. HMRC also notes the Ministerial Statement last week, confirming some temporary COVID-19 relaxations in relation to certain protected pension ages.
  • TPR has issued its annual funding statement, which is particularly relevant for schemes with valuations falling between 22 September 2019 and 21 September 2020. It addresses the impact of COVID-19 and the need to reflect the current climate in recovery plans. Trustees who seek to bring forward their valuation date, as a result of COVID-19, should first take legal and actuarial advice and expect to be questioned by TPR on their reasoning.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.

Access our global COVID-19 Coronavirus Resource Hub for guidance on key legal and risk issues for businesses.

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