Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.
- All points on the pension schemes bill have now been agreed between the House of Lords and the House of Commons, and we are waiting for Royal Assent, when it will become an Act of Parliament. Once enacted, it will contain new powers for The Pensions Regulator (TPR), including the ability to issue civil fines of up to £1 million in certain circumstances. The notifiable events regime will be strengthened and two new tests will be introduced, on which TPR will be able to rely when issuing a contribution notice. Probably the most talked about provisions are the new criminal sanctions for avoidance of an employer debt and conduct risking accrued scheme benefits, which will carry penalties of an unlimited fine and/or imprisonment of up to seven years. Look out for our client communication and our blog on the new act.
- TPR has issued an interim response to its first consultation on the defined benefit funding code of practice. It confirms that there is general support for TPR’s regulatory approach, but concern about the practical application of the twin-track (fast-track and bespoke) regimes. TPR anticipates publishing its second consultation in the second half of 2021, together with the full response to the first consultation.
- The Department for Work and Pensions has issued a review of default fund charge caps and cost disclosures in defined contribution schemes used for automatic enrolment, following a call for evidence in summer 2020. The status quo is to be retained – the level of the charge cap will not change and transaction costs will not be included within the cap. However, legislation will be introduced to prevent flat fees being applied to small pots of less than £100. The government will consider legislating for standardised cost disclosures if voluntary take up is not sufficient.
- The Investment Association has joined forces with the pensions industry to create a steering group, which will drive forward various initiatives. These will include responding to the issues raised by the Financial Conduct Authority in its statement on building a regulatory framework for effective stewardship, and helping to deliver on the recommendations presented by the Asset Management Taskforce Stewardship Working Group in its report, Investing with purpose: placing stewardship at the heart of sustainable growth.
- Did you see last week’s 30-second #PensionsTensions video on the subject of defined contribution consolidation? Look out for this week’s video on our social media platforms.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.