Pensions Weekly Update – 30 June 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 government has issued its response to consultation on new draft regulations relating to contribution notices and TPR’s information gathering powers, which we considered in a March weekly update. The response confirms that “employer resources” in the new employer resources test will be calculated by reference to profits before tax. The response also confirms that the government intends to proceed broadly as set out in its consultation document, with just a few tweaks to the regulations. Interestingly, the government has said that the commencement regulations will make clear that the two new tests in relation to contribution notices will only apply in respect of acts (or failures to act) occurring on or after the regulations come into force on 1 October 2021.
The Pensions Regulator (TPR) has published a strategy setting out the steps it is taking to be a “fair, diverse and inclusive employer”. TPR intends to lead from the front to understand why inequalities occur in the pensions sector, to inform government policy and to work with fellow regulators to achieve the best outcome for all pensions savers. It also intends to promote high standards of equality, diversity and inclusion among its regulated community. TPR has been working on a plan with industry representatives to support and set targets for the development of more diverse and inclusive boards of trustees and governing bodies. The plan should be issued by the end of the year and will include methods for sharing resources and best practice in the industry.
The EU Commission has announced that adequacy decisions for the UK have been approved. The significance of this development is succinctly explained in a statement from the Information Commissioner’s Office: “This means the EU has determined the UK’s data protection laws to be robust enough to ensure data can safely flow to the UK from the EU (and EEA)”. The approval of the adequacy decisions will mean that the flow of this data from the EU to the UK can continue and will not be affected by the expiry of interim arrangements at the end of June. Note that the adequacy decisions include a “sunset clause”, which provides that the decisions will automatically expire after four years, although those decisions may then be renewed.
TPR has published its analysis of its annual funding statement 2021 (AFS). It notes that its analysis gives further context to the AFS and is highly technical in nature. TPR states that, in reality, employer affordability may have been impacted by the effects of COVID-19, but that this is not taken into account in its analysis. TPR also says, “Our analysis shows that most major asset classes invested in by UK pension funds achieved substantially positive returns over the three years to 31 December 2020 and the three years to 31 March 2021.”
HMRC has issued Pension Schemes Newsletter 130, which extends some of the easements that HMRC introduced in response to the impact of COVID-19 relating to relief at source payments, relief at source declarations and submitting the annual statistical return without a signature. All other easements will end on 30 June 2021.
Look out for our #PensionsTensions New Dimensions brochure tomorrow. The brochure summarises our recent factsheets and highlights “hot off the press” emerging tensions.
Don’t forget to register for our webinar, #PensionsTensions: Proportionality and The Pensions Regulator’s Draft Single Code of Practice, which is running tomorrow, to hear about the key elements of TPR’s draft single Code of Practice and how trustees can adopt a reasonable and proportionate approach to meeting TPR’s expectations.