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 (Employer Resources Test) Regulations 2021, which were issued in draft along with the government's response to consultation, have now been approved by Parliament and will come into force on 1 October 2021. The regulations confirm that "employer resources" in the new employer resources test (where The Pensions Regulator (TPR) may issue a contribution notice where an act or failure to act results in a material reduction in the employer’s resources relative to the amount of the estimated s75 statutory debt, and TPR considers it is reasonable to do so) will be calculated by reference to profits before tax.
Parliament has also approved the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021, which will come into force on 1 October 2021 and apply to certain schemes offering defined contribution (DC) benefits. For scheme years ending after 1 October 2021, trustees will be required to report net investment returns. For scheme years ending after 31 December 2021, trustees of small schemes with less than £100 million of assets will need to undertake an annual value for members assessment. The statutory guidance contains more information.
TPR and the Financial Conduct Authority have published a joint discussion paper on developing a common framework for measuring value for money in trust-based and contract-based DC schemes. The paper addresses the key metrics of costs and charges, customer service/scheme oversight and investment performance, and considers how these could be benchmarked and disclosed to allow meaningful comparisons to be made by members, trustees, independent governance committees and employers. The proposals build on the existing legal requirements and regulatory standards. Comments should be submitted by 10 December 2021.
The Taskforce on Pension Scheme Voting Implementation was set up by the government in December 2020 to determine how to increase and improve the quality in the voting of equity shares by occupational pension schemes. It has now published its recommendations for government, regulators and the pensions industry, including that trustees should either set a voting policy of their own, or explicitly accept responsibility for those policies exercised on their behalf by their asset managers and all asset managers should offer asset owners the opportunity to set an "expression of wish" as to how votes should be exercised on their behalf, regardless of how they invest.
The Society of Pension Professionals has published a short environmental, social and governance (ESG) guide for small to medium-sized occupational pension schemes, which includes information on trustees' legal duties and obligations and a suggested framework for trustees to assist them in carrying out their duties in relation to ESG.
Have you registered for our webinar on the scope of duty and economic loss? Our presenters will cover a recent Supreme Court decision and the impact on pension schemes and advisers.
We have issued two blogs in the last few days. Professional support lawyer, Lynn Housecroft, gave some thoughts on how to approach TPR’s draft single code of practice. Associate, Alexandra Heggie, examined how trustees’ approach to guaranteed minimum pension (GMP) equalisation could impact their long-term objectives.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.