Pensions Weekly Update

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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 Pensions Regulator (TPR) has published its annual funding statement, which is particularly relevant for schemes with valuation dates between 22 September 2020 and 21 September 2021. The funding statement gives a broad overview of what is in the pipeline, including that the new defined benefit funding code of practice is unlikely to come into force until late 2022 at the earliest. In the meantime, trustees should continue to apply the principles set out in the current funding code. TPR recognises that there are diverging views on the impact of COVID-19 on future longevity improvements and states that "trustees should ensure their mortality assumptions are balanced, evidence-based and derived using a sound methodology. Where trustees wish to make amendments to their mortality assumptions, there should be justification to support this."
TPR has issued for consultation a revised draft code of practice 12, setting out its approach to the material detriment test, the employer insolvency test and the employer resources test when considering whether to use its powers to issue a contribution notice. The latter two tests were introduced by the Pension Schemes Act 2021. The government has already consulted on draft regulations that will set out the meaning of "employer resources". TPR's draft code of practice also updates some of the scenarios used in the existing code in relation to the material detriment test. TPR says that the draft code of practice, once finalised, will be incorporated into its new single code of practice. Consultation closes on 7 July 2021.
The first set of regulations bringing into force parts of the Pension Schemes Act 2021 from 31 May 2021 have been published. They bring into force the power to make regulations in relation to the new contribution notice tests, the new declaration of intent, TPR's interview powers with associated penalties, and changes to the transfer legislation. They also bring section 124 into full force, allowing for regulations that require trustees of occupational pension schemes to put in place governance and reporting structures in relation to the effects of climate change in line with the recommendations of the Taskforce on Climate-related Financial Disclosures. The new regulations also bring in the retrospective definition of what counts as pensionable service for Pension Protection Fund entry purposes and make consequential amendments requiring TPR to include the new contribution notice tests in a code of practice.
The Pensions Dashboards Programme has published a call for input on the stages and timing that should be used to connect providers to the dashboards ecosystem. The closing date for submissions is 9 July 2021.
In the second of our #PensionsTensions: New Dimensions factsheets, we focus on key risks in funding and investments, and consider how they have evolved in the two years since our #MeetPAUL (Protection Against Unmitigated Liabilities) campaign.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.