Pensions Weekly Update – 3 February 2021

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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.

The Pension Protection Fund (PPF) has published its levy determination for 2021-22. The key points are as announced in early January, which include reducing (by up to 50%) the levy for small schemes with liabilities of up to £50 million, reducing the risk-based levy cap for all schemes from 0.5% of liabilities to 0.25% of liabilities and confirming the levy estimate of £520 million for the 2021-22 levy year. Owing to the pandemic, the PPF is taking a year-by-year approach to the levy determination, and hopes to move back to a multi-year approach for the 2023-24 levy year. With a couple of exceptions, the key deadlines to remember are midnight on 31 March 2021 (in particular, for the submission of pension scheme returns and contingent asset certificates on Exchange) and 5 p.m. on 1 April 2021 (for the submission of contingent asset documents by email to information@PPF.co.uk). Remember that while a guarantor strength report (where required) may be submitted to the PPF up until 5 p.m. on 1 April, it must have been completed and signed off before midnight on 31 March.
The PPF has issued for consultation some draft guidance to accompany the commercial consolidator appendix to its 2021-22 levy rules. The consultation closes on 16 February 2021. The PPF has said that it will issue the outcome of the consultation and final form guidance before 31 March.
Pensions Minister Guy Opperman has said that we should expect the long-awaited transfer regulations, which will impose restrictions around statutory transfers and aid the combat of pension scams, to be in force by September or October 2021.
The Pensions Administration Standards Association-led Guaranteed Minimum Pension (GMP) Equalisation Working Group has published an update, highlighting work carried out in 2020 and providing a useful summary of its plans for 2021. The update sets out the proposed timetable for the publication of further guidance and information. This includes a target publication deadline of the end of February for guidance on the tax implications of GMP equalisation and a statement that the newly formed GMP conversion subgroup is aiming to publish material by the end of April. Also of note is that work has started on guidance concerning equalising past cash equivalent transfer values, following the latest Lloyds judgment.
The government has published its response to consultation in respect of its policy on proposals relating to governance requirements and mandatory reporting in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Alongside this, the government has published draft regulations and draft statutory guidance for consultation. The governance requirements will apply initially to all authorised master trusts and authorised collective money purchase pension schemes (together "authorised schemes"), as well as to occupational pension schemes with £5 billion or more of relevant assets. Authorised schemes will be required to comply with the governance requirements from 1 October 2021. The measurement time for all other schemes (which are also required to comply from 1 October 2021) will be the end of the scheme year falling on or after 1 March 2020. Those schemes that have £1 billion or more of relevant assets at the end of the scheme year falling on or after 1 March 2021 will be required to comply with the governance requirements from 1 October 2022. Trustees will be required to meet the climate change governance requirements that underpin the 11 recommendations of the TCFD and to report on how they have done so within seven months of the end of the scheme year. New provisions to be introduced into the Pensions Act 1995 will require trustees to have regard to statutory guidance. Where trustees choose to diverge from the statutory guidance, they would need to be able to explain their reasons for doing so – ideally in their TCFD report. The trustees will be required to publish their TCFD report on a publicly available website accessible free of charge. The Pensions Regulator will have discretion to fine trustees where the report does not contain all relevant information.
The government has also published non-statutory guidance prepared by the Pensions Climate Risk Industry Group to assist trustees with their journey towards aligning their pension schemes with the TCFD recommendations, whether or not they will be in the first wave of schemes that will be subject to the mandatory reporting requirements.
GMP equalisation ranks high on the agenda of many trustee boards. The first blog in our GMP Equalisation Under the Microscope series examines claims for GMP equalisation top-ups to historic transfers.
Did you see last week’s 30-second #PensionsTensions video on the subject of pensions tax relief? Look out for this week’s video on our social media platforms.