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 Pension Protection Fund (PPF) has published a blog by Sara Protheroe, chief customer officer, setting out further thinking around the possibility of the PPF becoming a public consolidator of pension schemes. Ms. Protheroe notes that the PPF would be willing and able to accept the challenge of acting as a consolidator and that the proposed separate independent structure would present opportunities to design a public consolidator that works efficiently and effectively for the industry.
Continuing the theme of the chancellor’s Mansion House proposals for pension reform, at a Mansion House summit last week, the chancellor is reported to have said that the UK has over-restrictive regulatory structures for pension funds, meaning that trustees are excessively focused on cost rather than returns. He is reported to have encouraged pension trustees to develop links with venture capital companies and said that he intends to conclude the policy-making process by the time of the autumn statement on 22 November 2023. The Pensions Regulator has released a transcript of the speech given at the summit by its chief executive, Nausicaa Delfas. As part of the drive towards greater private equity investment by pension funds, the British Private Equity and Venture Capital Association has launched the venture capital investment compact, which is a commitment by UK venture capital and growth equity fund managers to develop a long-term and constructive working relationship with UK pension investors. The signatories to the compact commit to (1) attracting UK pension funds as limited partners into the funds they manage or advise, (2) partner with pension investors to consider how they can produce effective investment structures to suit their needs to allow allocations to funds in the interest of savers, and (3) share best practice/rules of engagement for working in private markets with defined contribution schemes, particularly trustees and their consultants/advisers.
The Economic Crime and Corporate Transparency Act 2023 has received royal assent. This legislation strengthens the powers of Companies House to act more like a regulator than a filing service and it introduces greater transparency requirements to combat money laundering. Once secondary legislation is in place (and Companies House has the necessary systems in place to cope), there will be a new requirement to verify the identity of all directors and persons with significant control of both new and existing companies. This requirement will affect corporate professional trustees and pension schemes with corporate trustees. Another measure that will impact corporate professional trustees and pension schemes with corporate trustees is contained in the government’s white paper on corporate transparency, which was published in February 2022. In the white paper, the government said that it would introduce a prohibition on using corporate directors (i.e. where a company acts as a director of another company), with certain principled based exceptions. While the framework for introducing a ban is actually contained in the Small Business, Enterprise and Employment Act 2015, it looks as though the government does intend to bring the general ban into force as part of its package of corporate transparency reforms. Any exceptions to the ban will be contained in regulations, and there will be a 12-month transitional period. It is expected that there will be an exception that would allow a company to have one “layer” of corporate directors. Clients and professional trustees that operate through structures containing more than one layer of corporate directors may want to take advice on their existing structure.
The Pensions Ombudsman’s office has announced that Anthony Arter (former pensions ombudsman) will continue in the role of deputy pensions ombudsman for a period of nine months from 15 January 2024. He will continue to work on complex fraud cases while the Department for Work and Pensions recruits a permanent replacement.
Last week’s Pensions Life Hack considered how trustees of DB schemes that are targeting buyout can address any residual defined contribution liabilities in their scheme. Look out for this week’s Life Hack, which will address quorums at trustee meetings and the impact of technology. Our series of Life Hacks can be found in our Pensions Thought Leadership Library.
If you would like specific advice on any of these issues or on anything else, please contact a member of our Pensions team.