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 its annual funding statement analysis 2022, which is its detailed technical analysis providing further context to the annual funding statement 2022 that it published at the end of April. In our weekly update of 4 May 2022, we noted that TPR said in its funding statement that trustees should continue to monitor shareholder distributions, be vigilant to the risk of covenant leakage and focus on the scheme's long-term funding objective. In the analysis, TPR says that it has excluded trends in employer affordability owing, in particular, to the uncertainty posed by the COVID-19 pandemic. TPR says that its analysis shows that most major asset classes invested by UK pension funds achieved substantially positive returns over the three years to 31 December 2021 and the three years to 31 March 2022. TPR notes that, in practice, the Russia and Ukraine conflict, COVID-19 and Brexit may have impacted the strength of the employer covenant and that this should be reflected in a scheme's technical provisions.
The Pension Protection Fund (PPF) has published a letter to members on its website, explaining that it is taking longer than originally expected to calculate uncapped compensation for PPF members and to pay arrears. The main reason for this is that the PPF does not hold all of the necessary data. Only data required to make compensation payments had been transferred to the PPF. Additionally, some errors have been identified in existing data. Offering some members the ability to take part of the uncapped element as a lump sum is requiring additional pensions and tax calculations that is also proving time consuming and complex. The PPF hopes to provide a further update on progress to members by August 2022.
On 26 May 2022, Rishi Sunak confirmed in his economy update that the state pension would once again benefit from the triple lock from April 2023. This follows on from legislation in November 2021, which had the effect of suspending the triple lock for a one-year period.
In our weekly update of 28 April, we noted the increasing risk of challenge that employers and trustees could face if they fail to provide a sharia-compliant pension scheme for Muslim employees. Kirsty McLean, Pensions partner, considers this issue further in her blog.