Pensions Weekly Update – 14 July 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 GMP Equalisation Working Group of the Pensions Administration Standards Association has issued detailed guidance on GMP conversion, which includes useful scenarios and worked examples for trustees who are considering conversion as a method of equalising for the effects of GMPs. The guidance also sets out practical examples of how schemes have dealt with the tax consequences of GMP conversion in the absence of any further steer from HMRC, but notes that professional advice should be sought, as the examples given are scheme specific. The working group has also established an administration sub-group, which will look at one-off queries that affect a large number of schemes, such as the GMP equalisation implications for death benefits and what this means for data requirements. The sub-group plans to issue its first question and answer document by the end of July 2021.
The Department for Work and Pensions (DWP) has issued a consultation on how occupational pension schemes offering flexible benefits (broadly, defined contribution or cash balance benefits) should give members a stronger nudge towards taking guidance from Pensions Wise. The proposed requirements would apply where a member over the age of 50 applies to take flexible benefits from the scheme or applies to transfer benefits with the intention of accessing pension flexibilities. Trustees would be required to nudge the member by facilitating a booking with Pensions Wise, unless the member actively chooses to opt out of this process. A nudge would not be required where the transfer is to a defined benefit scheme, where the sole purpose is consolidation, where the application is for a serious ill-health lump sum or where the member has received guidance or regulated advice on the transaction in the previous 12 months. There is no exemption for small pension pots. Consultation closes on 3 September 2021.
The DWP has launched an Occupational Pensions Stewardship Council, initially made up of 28 large UK pension schemes, which will use the council as a forum for sharing experience, best practice and research, and providing practical support. The DWP hopes that it will enable schemes to collaborate on stewardship activities such as shareholder resolutions, climate change, corporate governance and other topics.
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If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.