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.
Regulations have been published that bring into force on 1 October 2021 the majority of the new powers being made available to The Pensions Regulator (TPR) under the Pension Schemes Act 2021. The measures that will come into force include changes to the contribution notice regime (including the new employer resources and employer insolvency test), criminal sanctions for failing to comply with a contribution notice and the new offences of avoidance of an employer debt and conduct risking accrued scheme benefits. The regulations also include enhanced interview and inspection of premises powers for TPR and they will bring into force the new financial penalties regime of up to £1 million for certain acts/failures to act, such as failure to report a notifiable event. The regulations include transitional and saving provisions, which means that most of the new powers will not be capable of being used retrospectively. Trustees and employers may wish to consider training on what the new powers could mean for them.
The Pension Protection Fund (PPF) has confirmed that employers and trustees who face difficulties paying their PPF levy due to pandemic-related reasons will be able to apply for a 90-day payment extension for their 2021-22 levy, during which time interest will be waived. Application for an extension must be made within 28 days of receipt of the invoice.
In an oral statement to Parliament yesterday, Thérèse Coffey MP, Secretary of State for Work and Pensions, confirmed that for 2022-23 only, the basic and new state pensions will increase by 2.5% or in line with inflation. The earnings element will be set aside due to the “irregular statistical spike” over the review period, stemming from the pandemic and the effects of furlough. The earnings link will then be restored for the remainder of this Parliament. This deferral of the triple lock (which is a policy commitment by which the government raises the state pension each year in line with the greater of the rise in CPI, wage increases or 2.5%) is so that the government can avoid an 8% rise to pensions in April, which would result in intergenerational unfairness. In addition, from April 2023, a separate “health and social care levy” will appear on payslips, ringfenced to fund investment in health and social care. For the first time, more than 1.2 million working pensioners, who do not currently pay national insurance, will also be required to pay the new levy. There will also be an additional tax of 1.25 % on dividends from share holdings. Boris Johnson explained that these measures are necessary to tackle the backlog in the NHS at the same time as fixing long-standing problems in social care.
Did you see “Pensions Lessons for Trustees – Back to Basics”? Our annual back-to-school themed publication summarises recent developments and highlights what to look out for in the months ahead. It should help you to get back on track after the summer break and plan for action in the autumn.
We have recently issued two new guides in our #How2DoPensions series, which set out legal requirements and offer some practical tips. The first guide covers the preparation of a scheme’s statement of investment principles and implementation statement. The second guide looks at how to take account of environmental, social and governance factors, including climate change, when setting a scheme’s investment policy. Visit our Thought Leadership Library for the full series of our #How2DoPensions guides, briefings and campaign materials.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.