Pensions Weekly Update – 26 January 2022

Authors:

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.

Charles Counsell, Chief Executive of The Pensions Regulator (TPR), has issued a blog highlighting how TPR will protect pensions savers in 2022. He confirms that TPR will continue with its efforts to “stop the scourge of scammers” and wants to see increased reporting of scam activity by the pensions industry. TPR also wants pension schemes to embrace the challenges and opportunities of climate change – currently, “too few schemes are integrating climate change into their decision-making”. Work to encourage greater diversity on trustee boards is progressing – an action plan should be issued in the coming months and the industry working group is producing some “fantastic materials”. Mr. Counsell confirms that TPR’s second consultation on the draft defined benefit funding code will be launched in the late summer of 2022, after due consideration of responses to the consultation to be published by the Department for Work and Pensions (DWP) on draft funding and investment regulations, which is expected in spring 2022. Commenting on TPR’s new powers under the Pension Schemes Act 2021, Mr. Counsell states that “only lawbreakers need fear our new criminal powers” and “we are not in the business of making the lives of competent and responsible trustees, advisers or employers, or anyone operating in this space, harder.” Our recent blog by Patricia Bailey raises a number of practical considerations facing those with responsibilities under the draft new notifiable events framework.
TPR has published a consultation on its draft code of practice for the authorisation and supervision of collective defined contribution (CDC) schemes. This follows on from the DWP's outcome of consultation on draft CDC regulations, which we noted in our 22 December weekly update. TPR says that its intention is to incorporate the new CDC code into its single code of practice. The draft code sets out how an application for authorisation is made and the matters that TPR will take into account when considering applications. The draft code does not set out all aspects of the legislation, so applicants should take advice to understand all of their legal obligations in relation to the setting up and running of a CDC scheme. Consultation closes on 22 March 2022.
The Committee of Public Accounts (CPA) has published a report and recommendations into the underpayment of state pension totalling over £1 billion. The DWP estimates that it has underpaid 134,000 pensioners as a result of errors in the calculation of state pension for people who first claimed pension before April 2016 and who do not have a full national insurance record or who should have inherited additional entitlement from a deceased partner. The amount of underpayments vary, with one pensioner being owed over £128,000 in back payments. The average back payment will be £8,900. The CPA has made various recommendations, including that the "Department should start treating underpayments on State Pension as seriously as overpayments and set out to the Committee in its Treasury Minute response to this report what it is going to do both to prevent future errors and to strengthen its detection of systemic issues that lead to errors".
Next week will be February, which means that there will be less than two months left in which to arrange for contingent assets to be certified or recertified in order to qualify for a reduction in the Pension Protection Fund levy. The usual deadline of midnight on 31 March applies for the submission of contingent asset certificates, while the deadline for submission of accompanying documents, including any guarantor strength report, is 5 p.m. on 1 April 2022. If you need any help with this year's submissions, please get in touch with your usual firm contact.
We hope that you will register for our webinar on 17 February 2022, during which we will explore some of the practical issues that arise for pension trustees and administering authorities before and after setting their environmental, social and governance policy. Speakers will be joined by Marion Maloney, Head of Responsible Investment at the Environment Agency Pension Fund.