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 Administration Standards Association (PASA) has issued Counter Fraud Guidance to help raise awareness of the risks faced by pension scheme administrators. Fraud is estimated to cost the pensions sector more than £6 billion a year and instances of fraud have grown since the start of the pandemic. Administration controls need to keep pace with increasingly sophisticated tactics. The guidance examines types of pensions fraud (including identify fraud and internal fraud) and how administrators can protect themselves, the pension schemes they operate and scheme beneficiaries.
The Pensions Regulator (TPR) has noted that defined benefit pension scheme trustees are not as prepared as they should be to act upon the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021. These come into force on 1 October 2021 and require the largest schemes, starting with those that have an asset value of £5 billion or more as at 1 March 2020, together with authorised master trusts, to carry out certain governance and reporting requirements in relation to the risks and opportunities posed by climate change, in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). TPR reached this conclusion following the outcome of its defined benefit survey research report.
TPR has launched a consultation on two documents in response to the government's outcome of consultation in relation to mandatory governance and reporting for climate change risks. The first document comprises draft guidance on governance and reporting of climate-related risks and opportunities. It sets out the steps that TPR expects trustees to take and how to report on those steps. It also reminds trustees that the new single code of practice includes several modules referring to climate change. The second document comprises a draft appendix to TPR's monetary penalties policy, dealing specifically with breaches of the climate change legislation. Failure to publish a TCFD report online will attract a mandatory penalty of £2,500, rising to £5,000 where there is a professional trustee. The draft appendix also sets out how TPR expects to apply discretionary fines. For example, TPR says that it is more likely to treat a failure to carry out the underlying governance activities – as distinct from a failure to make disclosures – as more of a breach, resulting in a potential fine of up to £50,000.
For a quick overview of the forthcoming climate change requirements, and a summary of which schemes will be in scope, see our latest #How2DoPensions quick guide.
Finally, have you seen our #PensionsTensions: New Dimensions brochure? This summarises our recent factsheets and highlights a number of emerging tensions.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.