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.
- New regulations (The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021) have been published, which will change the conditions applying to a member’s statutory right to take a cash equivalent transfer value. The Department for Work and Pensions has also published its response to its previous consultation on those regulations. The changes have been introduced to help protect members from pension scams and will result in pension scheme trustees requiring members who have requested a statutory transfer to submit additional information and/or take scam specific guidance from the Money and Pensions Service in certain circumstances. The regulations also provide for trustees and scheme managers to refuse statutory transfer requests where specified pension scam “red flags” are raised. The changes will take effect from 30 November 2021. Trustees and scheme managers have only a few weeks to incorporate the new requirements into their existing transfer processes and should be liaising with pension scheme administrators and advisers to ensure that their schemes will be able to comply with the new regulations when they come into force. To help trustees, pension managers and administrators get up to speed with the changes, The Pensions Regulator has published helpful guidance on dealing with transfer requests under the new regime.
- Finance (No. 2) Bill 2021-22 has been published, which includes amendments to the Finance Act 2004 to amend the normal minimum pension age and protected pension age provisions. The normal minimum pension age will increase from 55 to 57 with effect from 6 April 2028. Individuals will be able to retain a protected pension age on certain types of transfers if (a) immediately before 4 November 2021 (the date of publication of the Bill), the member had an actual or prospective right under the pension scheme to any benefits from an age of less than 57, (b) the rules of the pension scheme on 11 February 2021 included provision conferring such a right on some or all of the persons who were then members of the pension scheme, and (c) the member either had such a right under the scheme on 11 February 2021 or would have had such a right had the member been a member of the scheme on 11 February 2021. At the consultation stage, it had been proposed that members would have until 6 April 2023 to become a member of a scheme that would give them a protected pension age. That has been removed. Instead, those members who requested a transfer before 4 November 2021, which is executed on or after 4 November 2021, will still be able to benefit from any protected pension age provisions in the new scheme. The Finance Bill also extends the deadlines for scheme pays, where the annual allowance charge is £2,000 or more.
- The House of Lords has voted an amendment to the Social Security (Up-rating of Benefits) Bill, which would see the state pension triple lock being retained for 2022/23, despite the government's announcement that there would be a temporary suspension to the earnings link. The Bill will pass back to the House of Commons to consider the amendments made by the House of Lords, before the final version proceeds to Royal Assent.
- The Pensions Ombudsman (TPO) has produced a fraud compensation fund factsheet for independent trustees, which highlights that bringing a complaint before TPO could assist an independent trustee with a subsequent claim against the fraud compensation fund. For example, TPO notes that before any payment can be made out of the fraud compensation fund, a trustee must obtain recovery of the reduced assets attributable to dishonesty, insofar as possible within a reasonable time and without incurring disproportionate cost. TPO reminds trustees that it has the power to investigate and make appropriate orders in dishonesty cases, which would assist trustees in these circumstances.
- TPO has also issued a determination factsheet, which sets out what happens when a determination is published, enforcing compliance with a determination and appealing against a determination.
- The government has published its outcome of consultation on its proposal to move to a single, permitted universal charging structure for use within defined contribution schemes used for automatic enrolment. Regulations will be put in place to implement a de minimis on the charging of flat fees as part of a combination charge from April 2022. This is intended to ensure that a member’s pension savings at or below £100 will be protected from flat fee charges.
If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.