Pensions Weekly Update – 6 July 2022

    View Author July 2022

    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 Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) have issued a joint statement on the operation of the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 in response to concerns about the application of a red flag pursuant to the regulations where overseas investments or small-scale incentives feature in a pension transfer. TPR has made changes to its guidance on dealing with transfer requests, including revised commentary on when trustees can consider granting a discretionary transfer if scheme rules allow this. The government committed to review and report on the regulations within 18 months of them coming into force (on 30 November 2021) and the DWP has confirmed that this review is “currently underway”.
    • The Investment Association and The Pensions and Lifetime Savings Association have issued a report with recommendations on how stewardship and sustainable value could be better embedded into the relationship between asset owners and investment managers. Recommendations include the establishment of a “governing charter” to set out mutual expectations for prioritising and incentivising a focus on long-term, sustainable value.
    • Accounting for Sustainability and The Employer Covenant Practitioners Association have produced top tips for trustees and advisers of defined benefit schemes on why and how to embed ESG considerations into employer covenant assessments.
    • TPR has published its annual survey of trust-based occupational defined contribution pension schemes. Worryingly, 43% of schemes with fewer than 12 members and 31% of schemes with between 12 and 99 members were either unaware of TPR’s codes of practice, or had never used them. David Fairs, TPR’s Executive Director of Regulatory Policy, Analysis and Advice, said: "Good governance is key if trustees are to achieve good member outcomes. Being aware of codes relevant to them and following them is a very basic expectation on trustees of any scheme regardless of size. If trustees cannot meet this very basic standard, they should consider winding up and consolidating savers into a better-run scheme." The survey also found that two-thirds of schemes with assets of less than £100 million were not aware of the requirement to carry out detailed value for member assessments. Another finding was that smaller schemes are less focused on assessing risks and opportunities relating to climate change than larger schemes.
    • Those readers who are working through GMP equalisation exercises may be interested in HMRC’s Pension schemes newsletter 140. The newsletter contains information on how HMRC will view interest payments made in addition to a payment of pension arrears as part of a GMP equalisation exercise, and how such interest payments should be treated for tax purposes.
    • Our thought leadership library contains useful resources to help with your approach to compliance with the single code of practice, ESG, pensions dashboards, the Pension Schemes Act 2021 and much more.

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