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.
As part of Guy Opperman’s speech on the establishment of a new Taskforce on Pension Scheme Voting Implementation, the minister for pensions and financial inclusion confirmed that he would take forward a recommendation made earlier in the year by the UK Sustainable Investment and Finance Association for a central directory of pension schemes’ statement of investment principles (SIPs). This would be supported by The Pensions Regulator (TPR) and the Department for Work and Pensions. In our view, this would simplify the challenges faced by some pension scheme trustees in publishing their SIP online in a publicly available, easily searchable, format.
The Pension Protection Fund (PPF) has published its 2020 Purple Book, which comprises a comprehensive fact book of data on 5,318 defined benefit (DB) pension schemes in the private sector (estimated to be 99.8% of the schemes eligible for PPF assistance). The Purple Book reports that the net funding position of schemes within the DB universe on a section 179 basis worsened to a deficit of £90.7 billion for the year ended 31 March 2020 compared with a deficit of £12.7 billion for the year before. Proportionately, the difference in deficits on a full funding basis does not look quite so bleak – £668.5 billion for the year to 31 March 2020 compared with a deficit of £644.9 billion for the previous year. There are 9.9 million members of DB schemes, with 46% of DB schemes now being closed to future accrual.
We are experiencing an increase in queries regarding the transfer of pension scheme personal data outside the EEA (typically by administrators and other service providers). In line with the ruling of the Court of Justice of the European Union in Schrems II, checks should be carried out and additional safeguards may need to be adopted wherever such transfers take place, including where trustees/service providers seek to rely on standard contractual clauses (SCCs) or binding corporate rules to protect that personal data and meet the requirements of the GDPR. As well as invalidating the Privacy Shield, the case made it clear that the SCCs on their own (or other similar measures) are unlikely to provide sufficient protection for data transfers outside the EEA and that where suitable additional measures cannot be implemented, it may be necessary to stop the transfer of data. In November, the European Data Protection Board published draft guidance (for consultation) including recommendations regarding steps that should be taken where there is a transfer of personal data outside the EEA. The Information Commissioner’s Office (ICO) has stated that it is reviewing the recommendations and may publish its own guidance. In the meantime, the ICO reiterates that, “organisations should take stock of the international transfers they make, and update their practices as guidance and advice becomes available”. Note also that the European Commission has published revised draft SCCs. These are also open for consultation but, once approved, it is intended that organisations will have a one-year grace period to implement the new SCCs if they rely on them to transfer personal data outside the EEA.
The Pension Schemes Bill continues to make its way through Parliament, with only a few outstanding points left to be agreed between the House of Commons and the House of Lords. The most significant point of disagreement, from a trustee perspective, is the amendment made by the Lords that would require TPR to treat open schemes differently from closed schemes for scheme funding purposes. This proposed amendment was rejected by the House of Commons.
Our Pensions Festive Quiz 2020 was issued yesterday and entries close on 17 December. Can you fill in 12 gaps to be in with the chance of winning a prize?
Did you see last week’s 30-second #PensionsTensions video on the subject of tricky transfers? Look out for this week’s video, which offers tips on dealing with DB consolidation.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.