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 Pensions Regulator (TPR) is consulting on consolidating the codes of practice into a single, online, user-friendly code. The first phase is a consolidation of 10 existing codes into 51 short, topic-based modules. The consolidation also brings in new requirements introduced by the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018, including the need for schemes to have an effective system of governance proportionate to the size, nature, scale and complexity of their scheme. Private sector schemes with 100 or more members will need to carry out an annual “own risk assessment” to assess how well their policies and procedures address financial and operational risks. Areas of new content, including cyber controls, remuneration policies, stewardship and climate change, are highlighted in a document that accompanies the consultation. The consultation closes on 26 May 2021.
The Department for Work and Pensions (DWP) has published its consultation on draft regulations amending the contribution notices regime and the information gathering powers of TPR. The Pension Schemes Act 2021 introduces two new tests into the contribution notices regime: the employer insolvency test and the employer resources test. Under the first set of draft regulations, it is proposed that an employer's resources should be based on normalised profits of the employer before tax. The second set of regulations look at the information that interview notices should contain (including how to join a virtual interview, if applicable), clarify the use of inspection powers in relation to multi-employer schemes and set out fixed and escalating penalties for non-compliance with information gathering requests (rather than TPR having to rely on the use of criminal sanctions). The consultation closes on 29 April 2021.
The DWP is also consulting on draft regulations that would allow performance fees to be smoothed over a five-year period for the purposes of calculating the charge cap in the default funds of defined contribution schemes used for auto-enrolment. This is part of the government’s commitment to removing the barriers that deter pension funds from investing in certain types of illiquid assets – it intends regulations to be in force in October 2021. The consultation also seeks views on whether the “look-through” requirement in relation to charge cap compliance reduces the attractiveness of some alternative asset classes.
The Pensions Ombudsman (TPO) has published "Panels and Independent Financial Advisers" guidance, which sets out TPO’s approach and expectations where pension scheme administrators, trustees and/or employers provide factual information to members in respect of independent financial advisers (IFAs), including where members are provided with a list of IFAs that they may like to use.