Pensions Weekly Update – 2 December 2020

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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 government and the UK Statistics Authority (UKSA) have published the response to their consultation on the timing of RPI reform. As announced last year, the UKSA intends to bring the methods and data sources of the CPIH into the RPI and this change can be made in February 2030. (The chancellor has not given his consent to an earlier change.) The impact on defined benefit pension schemes will differ depending on the scheme’s investment profile and on whether revaluation of deferred pensions and increases to pensions in payment are linked to the RPI. We recommend that trustees and sponsoring employers discuss this issue with their advisers and put an action plan in place. The likely actions for trustees include a review of the scheme’s investments, consideration of the impact on scheme funding and a review of transfer value assumptions and other factors used in benefit calculations. Trustees should also consider member communications. Sponsoring employers should assess the impact on year-end accounting figures.
The Asset Management Taskforce was established by HM Treasury in 2017 in order to establish better dialogue between the government, the asset management industry and the Financial Conduct Authority. The taskforce has now published its report, "Investing with purpose: placing stewardship at the heart of sustainable growth". The report has been produced in collaboration with stakeholder working groups, which included representatives from The Pensions Regulator (TPR) and the Department for Work and Pensions. The report sets out 16 recommendations for the asset management industry, regulators and pension funds. The report includes a recommendation that UK pension schemes should be required to explain how their stewardship policies and activities are in scheme members’ best interests and suggests that TPR should issue related guidance. Separately, it has been reported that Guy Opperman has announced the launch of a Taskforce on Pension Scheme Voting Implementation, to identify issues that trustees face when implementing their own voting policies, particularly where investment is in pooled funds. This follows on from a report by the Association of Member Nominated Trustees on barriers to trustee voting and effective stewardship.
Our Winter 2020 – 2021 Hot Topics in Pensions contains a summary of topical issues for your trustee and corporate pensions agendas. You may also learn something about New Year traditions around the world.
Look out for this week’s 30-second #PensionsTensions video on the subject of tricky transfers.

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