Pensions Weekly Update – 2 March 2022

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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 (TPR) has published an appendix to its climate change guidance for pension trustees. The guidance is for those trustees who are required to comply with the new climate-related governance and reporting duties in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), i.e. those schemes that had assets of £5 billion or more on 1 March 2020, plus authorised master trusts. Smaller schemes, with assets of £1 billion or more on 1 March 2021, will come into scope on 1 October 2022. The new appendix sets out a step-by-step example of the actions that a trustee board should/could be taking. David Fairs, TPR’s Executive Director of Regulatory Policy, Analysis and Advice, said: “We expect this example will prove helpful to trustees and other industry stakeholders as they get to grips with the new, climate-related regulations … Those running schemes out of scope of the rules but who want to do more to manage climate-related risks and opportunities may also find both our new example and final guidance helpful.”
The government has published its outcome of consultation on the rate of revaluation applied to fixed rate revaluation of guaranteed minimum pensions for those leaving pensionable service between 6 April 2022 and 5 April 2027. The rate will reduce from the current rate of 3.5% per annum to 3.25% per annum, with effect from 6 April 2022. The Occupational Pension Schemes (Schemes That Were Contracted-out) (No. 2) (Amendment) regulations 2022 make provision for the change.
The Pensions (Extension of Automatic Enrolment) Bill is a private members' bill that had been making its way through Parliament. It reduces the age from which automatic enrolment will apply from 22 to 18. It also proposes abolishing the lower qualifying earnings trigger, which is currently £6,240. This would mean that all of a worker's income up to £50,270 would be used to calculate pension contributions. The bill does not seek to remove the £10,000 earnings trigger. The bill has been introduced under the 10-minute rule, which is usually used as an opportunity to voice an opinion rather than being a serious attempt to get a bill passed. Reports in the press suggest that there will be insufficient time for it to become law during this parliamentary session and that reform will, therefore, take place as part of wider legislation.
The Pension and Lifetime Savings Association has published its Stewardship and Voting Guidelines 2022, updating the 2021 version. It includes a greater focus on executive remuneration (especially in those organisations that benefitted from government assistance during the pandemic) and TCFD reporting by companies in which funds are invested.
HMRC has published a consultation on draft regulations supplementing the provisions of the Finance Bill 2022. The draft regulations relate to an extension to the period within which an individual can give notice to their pension scheme administrator to pay their annual allowance charge and within which a scheme administrator must provide information about, and account for, an annual allowance charge. Consultation closes on 15 March 2022 and the draft regulations are due to come into force on 6 April 2022.
The Money Laundering and Terrorist Financing (Amendment) Regulations 2022 come into force on 9 March 2022, extending the timeline for registering all UK trusts (whether or not they are subject to certain taxes) on HMRC’s Trust Registration Service (TRS). The extension (broadly to 1 September 2022) has been implemented because it took longer than expected to adapt the TRS to extend it to all trusts. Registered pension schemes, however, remain exempt from registration. The regulations also introduce an exemption for trusts set up for minors.
If you missed our latest webinar exploring some practical tips for dealing with a challenge to the trustees’ ESG policy, the recording is now available.