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.
On Friday, the government announced that from 1 November, it will be expanding the Job Support Scheme (JSS) for businesses whose premises are legally required to shut for a period over winter as part of local or national restrictions. Businesses can apply for grants to pay the wages of staff who “have been instructed to and cease work” in eligible premises for a minimum of seven consecutive (or calendar) days. The grant will cover two thirds of an employee’s normal pay, up to a limit of £2,100 per month. The grant will not cover employer national insurance contributions and pension contributions. In line with the rules of the JSS announced at the end of September, large employers who use the JSS are expected to refrain from making capital distributions, such as dividend payments or share buybacks, while accessing the grant. High-level information about the expansion of the JSS is provided in a three-page factsheet, which does not provide answers to all the questions employers and employees may have about eligibility, the application process and support available. Further guidance is promised, which will hopefully fill in some of the gaps. In the meantime, for an analysis of what we have been told so far, please read this publication from our Labour & Employment colleagues.
The Court of Justice of the European Union (CJEU) has handed down its judgment in a case concerning the United Biscuits Pension Fund and the VAT treatment of investment management services. This follows a question referred to the CJEU by the Court of Appeal – are supplies of pension fund management services by (a) insurers and/or (b) non-insurers insurance transactions within the meaning of the relevant EU directive? In the opinion of the Advocate General (AG), which was given on 14 May 2020, he said that the concept of insurance transactions must be understood in a strict sense. It is not enough that the service is provided by an insurance company. There must be a premium and a transfer of risk. The CJEU has followed the AG’s opinion and ruled that “investment fund management services supplied for an occupational pension scheme, which do not provide any indemnity from risk, cannot be classified as ‘insurance transactions’ … and thus do not fall within the VAT exemption …”.
The Pension Protection Fund (PPF) has issued its annual report and accounts for 2019/20. As at 31 March 2020, the PPF had £36.1 billion of assets under management and 277,000 PPF members (plus 148,000 members of the Financial Assistance Scheme, which is run by the PPF). January 2020 saw the 1000th pension scheme transfer to the PPF. As at the financial year-end, the PPF was 113% funded with reserves of £5.1 billion. While reserves were down by £1 billion for the year, the overall tenor is that the PPF is “well-equipped to weather the storm” posed by the current pandemic.
The pension schemes bill continues its passage through Parliament. It received its second reading in the House of Commons on 7 October and was approved without a vote. There was much debate around the pensions dashboard, how to better prevent transfers to pension scam vehicles, superfunds (and the fact that the bill does not cover these) and concern that too much power might be handed to The Pensions Regulator under the bill in relation to the scheme funding regime and new criminal offences introduced by the bill. The bill is now being scrutinised by the public bill committee, which is expected to report back to the House of Commons by 5 November 2020.
In case you missed it, here is a link to our latest blog, explaining the actions that pension trustees should take before 7 January 2021 in order to comply with the Competition and Markets Authority’s order relating to the investment consultancy and fiduciary management market.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.