KM Weekly Digest for weeks ending 3 July 2022

1st July, 2022

  • Law and Policy

    Pensions dashboards: further consultation

    Following a consultation in January, a supplementary consultation on two further provisions is necessary to complete the Pensions Dashboards Regulations. This is in part in response to industry feedback:

    • Dashboards Available Point (DAP): In the January consultation, DWP included some brief information on the DAP. Having carefully considered responses to the consultation, it was clear that industry wanted more clarity, and DWP propose providing further clarity through the proposed DAP provision within the regulations.
    • Disclosure of Information: DWP are consulting as this was not included in the earlier draft Regulations. It is a supplementary measure as it is needed to support the dashboard delivery and operational processes. It does not affect what schemes need to do but it is necessary to consult ahead of laying the draft Regulations before Parliament.

    The Registered Pension Schemes (Authorised Member Payments) Regulations 2022

    These Regulations (SI 2022/723) enable assets held within registered pension schemes which are “dormant” to be transferred out of the pension scheme into a reclaim fund without incurring unauthorised payments charges.

    Link(s) to further information –

    The Registered Pension Schemes (Authorised Member Payments) Regulations 2022 (legislation.gov.uk)

    The Pensions Regulator (TPR) update

    Annual survey of trust-based occupational DC pension schemes

    TPR has published results from its annual survey of trust-based occupational DC pension schemes. According to the research, every master trust and 92% of large schemes had allocated time or resources to assessing any financial risks and opportunities associated with climate change. This proportion fell to 55% of medium schemes, 9% of small schemes and 5% of micro schemes.

    Link(s) to further information –

    Smaller DC schemes urged to show they offer value or wind up | The Pensions Regulator

    HMRC update

    Pension Schemes Newsletter 140

    HMRC latest Pension Schemes Newsletter contains articles on:

    • Pension scheme arrears and interest (covering equalising for GMP)
    • Managing pension schemes service
    • Accounting for Tax returns
    • TPR’s blog post on pension scams (see Perspective News: 26 June 2022)
    • Scheme Pays reporting clarification.
    • Link(s) to further information –

    Pension schemes newsletter 140 – June 2022 – GOV.UK (www.gov.uk)

    ‘Other’

    Report on pension fund/investment manager relationship

    A new report setting out recommendations to strengthen the relationship between pension funds and investment managers has been published. The report has been prepared by a steering group of investment managers, pension funds, investment consultants and lawyers which was jointly established by the Investment Association (IA) and the PLSA. The recommendations aim to embed stewardship into the relationship between investment managers and pension funds.

    Link(s) to further information –

    Investment relationships for sustainable value creation.pdf (theia.org)

    Guidance on administration implications of past transfers out

    The Pensions Administration Standards Association (PASA) has announced that the cross-industry GMP Equalisation Working Group has published guidance from its Administration sub-group, which focuses on the administration implications of past transfers out. The guidance includes a checklist that has been designed to detail the questions which require trustee consideration and their administrative implications.

    The new GMPEWG checklist aims to assist trustees to implement equalising past transfers out for the effects of GMP by focusing on a number of decisions which will influence both the scope of the project and the number of former members where a top up payment is due. As many of these decisions have the potential to impact the administration aspects of the GMP equalisation exercise, the checklist aims to detail the generic questions and administrative implications which can be used to inform discussions, capture the decisions made and provide an audit trail for the future; for example:

    • transferring schemes which have paid bulk transfer values are advised to take specific advice on how the Lloyds judgment impacts on those transfer exercises. Trustees should confirm early in the exercise if they need the administrator to implement any special terms or provisions for members who were part of a bulk transfer payment. If so, these members will require both special communications and calculations
    • interest on top up payments was set at 1% simple over bank base rates (from time to time) in the Lloyds 2020 judgment. Trustees should consider whether to use this approach to interest or may, having taken advice, decide to choose to use an alternative basis based on scheme rules or previous precedents. If trustees are to use 1% above base rate they should decide whether this should be on a simple or compound basis and whether this approach may need to be reflected in member communications and any FAQs used to answer member queries. Administrators should also consider recording the amount of the top up and any interest separately
    • for some groups of former members it may be possible for trustees to conclude that no top up payment is needed based solely on the transferring scheme’s benefit structure, knowledge of the basis used to calculate historic transfer values and/or the member’s accrual cessation date. If so, the scheme administrator should be advised if this applies to some or all members of the scheme so that these members are excluded from the population and the member’s record is flagged to indicate they were considered for the exercise and to provide an audit trail of why such members were excluded. Where this applies to a whole scheme, this should be recorded centrally as part of scheme governance

    Link(s) to further information –

    Press release – PASA releases GMP Equalisation checklist for past transfers out – The Pensions Administration Standards Association (pasa-uk.com)

    DWP annual statistics for workplace pension participation

    The Department for Work and Pensions (DWP) has published annual statistics for workplace participation by savers from 2009 to 2021, alongside the background information and methodology for the statistics. The latest edition is the ninth in the series and contains additional information on saving trends following the coronavirus (COVID-19) pandemic.

    Link(s) to further information –

    Workplace pension participation and savings trends: 2009 to 2021 – GOV.UK (www.gov.uk)

    DWP findings from retirement income planning survey

    The DWP has published its Planning and Preparing for Later Life (PPLL) document, a survey of over 2,500 40–75 year olds examining the choices people make regarding their retirement. The survey was commissioned in order to produce evidence for the development of policy in relation to the growing problem of inadequate retirement income. The PPLL survey also looked into how people had used pensions freedoms to access defined contribution (DC) pensions, finding that 56% of 60–65 year olds had already accessed at least one, while 29% who had accessed a DC pension had received no information, advice or guidance from their pension provider.

    Link(s) to further information –

    Planning and Preparing for Later Life – GOV.UK (www.gov.uk)

    DWP Pension Provision Survey 2019 results

    The DWP has published the results of the 2019 Employers’ Pension Provision Survey (EPP 2019). The EPP 2019, which was carried out by Kantar Public and the National Institute of Economic and Social Research (NIESR), is the thirteenth in a series of surveys carried out approximately every two years since the 1990s and aimed at revealing the extent and nature of pension provision by employers in Great Britain in 2019.

    Link(s) to further information –

    Employers’ Pension Provision Survey 2019 – GOV.UK (www.gov.uk)

    DWP research on planning and preparing for later life published

    The DWP has published Planning and Preparing for Later Life, a nationally representative survey of 2,655 40 to 75-year-olds. The survey includes findings on: income adequacy in retirement; how people have taken advantage of pensions freedoms to access their DC pensions; people’s knowledge of recent changes to the state pension; what would make it easier for people to continue working later in life; and experiences of planning for retirement among the self-employed.

    Link(s) to further information –

    Planning and Preparing for Later Life – GOV.UK (www.gov.uk)

    A4S guidance on embedding ESG considerations into covenant process

    Accounting for Sustainability (A4S) has, in conjunction with the Employer Covenant Practitioners Association, produced guidance for pension trustees and their advisors to help them insert environmental, social and governance (ESG) considerations into the employer covenant process. A4S states that despite the employer covenant evaluation process being unique to the UK pensions industry, the advice contained in the guide also applies to owners of global assets in their due diligence process.

    Link(s) to further information –

    Top tips for embedding ESG considerations into the employer covenant process.pdf.downloadasset.pdf (accountingforsustainability.org)

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    • Published byJohn Wilson

      John is Head of Technical, Research and Policy with over 33 years’ experience in employee benefits knowledge management He joined Dalriada in December 2019. Previously he was Head of Technical at JLT Employee Benefits for 20 years and pensions technical roles at...

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