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 Department for Work and Pensions (DWP) has conducted a scheduled review of aspects of the defined contribution (DC) governance regulations, including the chair’s statement, to assess whether the legislation is working as intended. The chair’s statement is “far too long, complex and costly to produce” with suggestions that it has become a “tick-box exercise” due to the mandatory fine imposed by The Pensions Regulator (TPR) for non-compliance. The overall purpose of the DC chair’s statement will be reconsidered and the DWP believes that the legislative requirement for TPR to issue mandatory fines should be re-examined. There is currently no timescale for the next steps.
The Pensions Administration Standards Association (PASA) has formed a working group to improve timescales and standards of transfers between DC arrangements, covering both trust-based and contract-based schemes. The group intends to issue guidance early next year.
In December, we noted that pension schemes with the benefit of an EU group company guarantee or other security might incur extra cost and timing issues if trustees ever need to enforce the terms of the guarantee/security in circumstances where no reciprocal arrangements are reached with the EU in relation to the recognition and enforcement of judgments. We provided an update on the position in April, reporting that while the UK had become a party to the Hague Convention (which applies in respect of agreements containing exclusive jurisdiction clauses), press reports indicated that the EU Commission did not think the UK should become a party to the Lugano Convention, which would address the circumstances where an agreement contains a non-exclusive jurisdiction clause. All Pension Protection Fund standard form guarantees executed before 31 December 2020 contain a non-exclusive jurisdiction clause. The EU Commission has now published its final recommendation that the EU should not approve the UK's application to become a party to the Lugano Convention. The ultimate decision rests with the EU Council, but it looks less likely that the UK will be able to take advantage of the reciprocal recognition and enforcement of judgment arrangements with EU member states under the Lugano Convention in relation to agreements containing non-exclusive jurisdiction clauses. Trustees with guarantees or other security provided by an EU company may wish to take advice to determine the type of jurisdiction clause in their documentation and the likely impact of this should they ever need to enforce their rights under the documentation. There is no one-size-fits-all solution, because the potential impact will vary depending upon the jurisdiction clause and the laws of the EU member state in which the guarantor resides. For some trustees, re-executing with an exclusive jurisdiction clause might be beneficial.
We are delighted that Victoria Jeacock has been promoted to partner within our Pensions team. Victoria was shortlisted for Lawyer of the Year at the Women in Pensions Awards 2020 and is an expert in both public and private sector pensions.
In the latest instalment in our GMP Equalisation Under the Microscope series of blogs, director Kevin Burge focuses on data gaps.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.