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 (TPR) is urging trustees of defined benefit (DB) schemes to prepare for the possibility of a sponsoring employer facing financial difficulties. TPR is witnessing an increase in corporate activity, which could have a detrimental effect on pension schemes and it expects this trend to continue. TPR has issued guidance setting out the steps that trustees can take to enable them to act quickly to protect the interests of scheme members if they spot warning signs of distress. The guidance reinforces the need for trustees to understand the statutory and contractual obligations of participating employers and to adopt a fully documented integrated risk management approach, with workable contingency plans and suitable triggers in place. The guidance also contains examples of TPR’s recent experience and a checklist for trustees. We encourage trustees to consult the guidance and assess whether they need to take further action.
The Pension Schemes Bill has completed its committee stage and its third reading in the House of Commons. A number of amendments were rejected – these include an amendment that would have required trustees to implement a “Paris alignment strategy” (to ensure that a scheme’s investment and stewardship activities are aligned with the Paris Agreement goal). A separate amendment was rejected that would have allowed trustees the discretion not to pursue employer exit debts that fall below a de minimis threshold (Guy Opperman pointed out the flexibilities in current legislation). MPs also voted against an amendment to the scheme funding provisions in the Pensions Act 2004, which would have required different treatment of open and closed DB schemes in accordance with their differing liquidity profiles.
We mentioned in last week’s update that the Coronavirus Job Retention Scheme (CJRS) will be further extended until the end of March 2021 and the Job Support Scheme and Job Retention Bonus have been shelved. The government has released additional details on the extended CJRS, including a Treasury Direction containing the legislation that will govern how it operates. The publication prepared by our Labour & Employment team contains more information on the extension to the CJRS.
Did you see last week’s 30 seconds #PensionsTensions video on the subject of data protection and cybersecurity? Tomorrow’s video will highlight how recent changes to insolvency law provide new options for employers.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.