Pensions Weekly Update – 30 November 2022

Authors:

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pensions Regulator (TPR) has published a consultation on its draft pensions dashboards compliance and enforcement policy. The policy is intended to set out TPR’s expectations regarding occupational pension scheme trustees’/managers’ compliance with their pensions dashboards obligations, as well as clarify its approach to enforcement in the event of a breach of the Pensions Dashboards Regulations 2022. The consultation closes on 24 February 2023, and TPR aims to publish the final policy in spring 2023. Although the final version of the policy will not be published for some months, the principles outlined in the draft policy are relevant now as trustees plan ahead for the introduction of pensions dashboards. For example, it is clear from the draft policy that TPR expects trustees to keep an audit trail and records of how they took steps to prepare to comply with their pensions dashboards duties.
HMRC has published for consultation draft regulations that address the tax consequences of the remedies that are being implemented to deal with age discrimination identified in the 2015 public sector pension schemes. HMRC has also published draft guidance to assist scheme administrators. The guidance explains that the aim of the regulations is to put affected members in the tax position they would have been in had the discrimination not occurred. More information is contained in HMRC's newsletter. Consultation on the draft regulations closes on 6 January 2023.
The Productive Finance Working Group was established by the Bank of England, the Financial Conduct Authority (FCA) and HM Treasury. It is composed of leading industry bodies, large pension schemes and investment managers. The group has published a key considerations guide that offers trustees of defined contribution schemes some investment guidance around making allocations to illiquid assets. The guide is divided into different topics covering value for money, performance fees, liquidity management, fund structures, the long-term asset fund, due diligence considerations and recommendations for consultants.
The FCA has announced that it has established a group to develop a voluntary code of conduct for environmental, social and governance (ESG) data and ratings providers. The group will be co-chaired by M&G, Moody's, London Stock Exchange Group and Slaughter & May. It will be composed of stakeholders, including ESG data and ratings providers and investors. The new code should provide welcome certainty around the quality of ESG data on which trustees rely when complying with their duties in relation to reporting in line with the recommendations of the Taskforce on Climate-related Financial Disclosures.
Several weeks on from the crisis in the liability-driven investment (LDI) market, we are seeing more clients assessing the robustness of their policies and the quality of advice that they had previously received. In some cases, pension trustees are contemplating litigation. All pension trustees, whether or not the LDI crisis adversely affected their pension fund, should use this as a prompt to revisit and test their governance structures.
We can promise you a delicious Winter Hot Topics in Pensions – watch out for it next week!