Pensions Weekly Update – 6 April 2022

April 2022
Region: Europe

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.

Changes to the notifiable events regime were expected to come into force on 6 April 2022 introducing new requirements to notify The Pensions Regulator of material corporate activity that could affect a pension scheme. Things have gone quiet. We await further news about the progress of these regulations. Our blog contains more information on the proposed changes.

The Department for Work and Pensions (DWP) issued a package of material affecting defined contribution (DC) schemes under the wrapper of a consultation named “Facilitating investment in illiquid assets”. The material has wider scope than the name suggests.

The package includes:

  • The DWP’s response to the Enabling Investment in Productive Finance consultation. Proposals to exempt well-designed performance-based fees from the regulatory charge cap received a “mixed response”. The DWP will consider industry comments before engaging further.
  • The DWP’s response to a call for evidence on the Future of the DC pensions market: the case for greater consolidation. The DWP asked for evidence to assess barriers and opportunities for greater consolidation of DC schemes with between £100 million and £5 billion of assets under management. The DWP referred to this as “one of the most fruitful calls for evidence we have run recently”. Following industry comment, it will not be introducing any new regulatory requirements with the sole purpose of consolidating the market in 2022 and will focus more on the value for money framework.
  • A policy consultation, under which it is proposed that trustees of relevant occupational DC schemes would be required to disclose and explain their policies on illiquid investment in their default funds. In addition, DC schemes with more than £100 million in total assets would be required to disclose and explain their default asset class allocation in the chair’s statement. Consultation closes on 11 May 2022.
  • A consultation on draft regulations intended to come into force in October 2022 amending employer-related investment regulations for DC master trusts with more than 500 employers. Restrictions on investments would apply in relation to the scheme funder, the scheme strategist, or a person who is connected with or an associate of the scheme funder or the scheme strategist. Restrictions on investments would no longer apply in relation to participating employers, who have little or no influence over the master trust’s investment strategy.

The Pension Protection Fund (PPF) has published its 2022-2025 Strategic Plan and Business Plan for 2022/23. The four key priorities in the Strategic Plan include meeting new challenges with brilliant service; excellence in asset and liability management; making a difference; and transforming ways of working using enhanced technology. The plan spells out how the PPF intends to meet these priorities, including aligning the compensation payable with recent court judgments, reviewing the PPF’s funding strategy and its methodology for calculating the levy, as well as ensuring investment costs provide value for money.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.

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