Hello, and welcome to the Month In Pensions for October 2021, brought to you by the pensions team at Gowling WLG.
I'm Ian Chapman-Curry and I'll be looking at one of the themes that has excited the pensions industry in October before taking you through the key points of this month's main legal and policy pensions developments.
I'm then joined by Ian Gordon, the head of Gowling WLG's pensions disputes practice, to discuss important pension cases that he was involved with and for which judgments were handed down over the summer.
We'll then take a look at what is coming down the tracks for the industry in November 2021.
Before we start, just a quick reminder that you can find out more about the pensions team at Gowling WLG and get all of our pension Insights at www.gowlingwlg.com/pensions-uk.
Theme for October 2021 – Prosecco over pensions
On 27 October, the Chancellor delivered his Autumn Budget and spending review speech. Fully 10% of his time was taken up by his plans to reform alcohol duties. Listeners found out that alcohol duties were first introduced to pay for the English Civil War in 1643. He then set out five steps that aim to create a simpler, fairer and healthier system for taxing alcohol.
His fourth measure covered sparkling wines. There were more nuggets for fact fans. Over the past decade, consumption of sparkling wines like prosecco has doubled in the UK. Good news for fans of bubbly – the duty premium on sparkling wines will be removed.
But what about pensions? Just 26 words in a speech that was just shy of 8,000 words long were directly applicable to pensions. The announcement was for another consultation to the regulatory charge cap for pensions schemes. And even this wasn't really about pensions – it was part of a package of measures aimed at getting more investment into innovative businesses.
One more measure was set out in HM Treasury's longer budget document. This confirmed that the government would tackle the problem for low earners in net-pay schemes.
So, a quiet budget for pensions. But there has already been a lot of new legislation for the industry to get to grips with. Some may well raise a glass to that.
This month's main developments
Pension Schemes Act 2021 brings in new TPR powers
On 1 October 2021, key provisions of the Pension Schemes Act 2021 came into force. These include:
- a range of new criminal offences and financial penalties, including for the avoidance of employer debt and conduct risking accrued scheme benefits and failure to comply with the notifiable events regime;
- two new grounds under which TPR can issue a contribution notice;
- the broadening of TPR's information-gathering powers; and
- climate risk governance and reporting requirements for the largest pension schemes;
Two further key provisions are likely to go into force in 2022:
TPR sets out how it intends to use its new powers
At the end of September, TPR issued a raft of documents which set out how it intends to use its new powers in various scenarios. Amongst the documents issued were:
- a final version of TPR's criminal offences policy;
- further consultation on three new policies:
- overlapping powers policy;
- monetary penalty powers policy; and
- information gathering powers policy;
- a consultation response on and final versions of Code of Practice 12 (Contribution notices); and
- an update to the clearance guidance.
TPR's criminal offences policy contains a lot of material that was not in the original draft. One area that has been expanded is the detail around the "reasonable excuse" defence along with a useful case study.
The PPF consults on its 2022/23 levy rules
The PPF opened its consultation on the 2022/23 levy rules. Given the continued impact of COVID-19 on accounts and also its strong financial position, the PPF proposes to leave key levy parameters, in particular the headline levy scaling factor, unchanged from last year. This means the PPF can 'wait and see' the levels of claims received rather than increase the levy pre-emptively. The PPF expects to levy £415 million, a reduction of £105 million from 2021/ 22. The consultation closes on 9 November.
TPO issues guidance on communicating with members
The Pensions Ombudsman's office published a brief new guidance note containing its views on best practice for communicating with pension scheme members. The note includes a link to the "How to avoid the Ombudsman" webpage which lists "Top tips for avoiding the Ombudsman". All of this makes useful reading for anyone responding to a member query or complaint.
DWP finalises legislation for simpler annual benefit statements
In October 2021, the DWP published a response to the consultation issued in May 2021 and confirmed DC schemes used for automatic enrolment will be required to produce a simpler annual pension benefit statement for all members not in receipt of pension benefits from 1 October 2022. Statutory guidance on the statement, an illustrative statement template and the necessary amending legislation have also been published.
The statement must be no more than one double-sided sheet of Size A4 paper if in paper form, or the equivalent if produced digitally. There are some exceptions where necessary to meet duties under the Equality Act 2010.
DWP consults on portfolio alignment metrics for climate risk reporting
The DWP has published a consultation paper, draft amending regulations and draft guidance on climate risk reporting. The legislation will require trustees of schemes that are subject to climate risk reporting requirements to adopt a new fourth metric from 1 October 2022. The fourth metric will be in addition to the three metrics that currently apply.
The fourth metric will require trustees to describe the extent to which their investments are aligned with the Paris Agreement goal of limiting the increase in the global average temperature to 1.5°C above pre-industrial levels. In addition, the DWP has published new draft guidance for trustees on stewardship and ESG policies.
Interview with Ian Gordon
The interview with Ian Gordon is not included in this transcript.
The interview covered two key pension cases for which judgments were handed down in June. These are covered in the following two Insights:
November 2021 in pensions
Now it is time to look forward to what the coming month will bring in pensions.
- 4 November 2021 - The Finance Bill 2022 is expected to be published on 4 November 2022. This is expected to amend the Finance Act 2004 to increase the normal minimum pension age from 55 to 57 with effect from 6 April 2028.
- 18 November 2021 - DWP consultation on changes to GMP fixed-rate revaluation closes.
- 26 November 2021 - Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill 2021-22 will receive its second reading in the House of Commons.
- 28 November 2021 - ICO consultation on the first draft chapter of its draft guidance on anonymisation, pseudonymisation and privacy enhancing technologies ends.
Subscribing to The Month In Pensions
And that is nearly all from The Month In Pensions for October 2021. We always finish off with a non-pensions recommendation - something a little lighter than reading the full text of
Before we get to that, just a reminder that you can get in touch if there are any items you'd like to see covered in future episodes of The Month In Pensions - just contact me, Ian Chapman-Curry and you can get more from the pensions team here.
If you liked this podcast, please rate or review it and, if you hit the subscribe button, The Month In Pensions will appear in your podcast feed each month. Finally, please feel free to share the podcast with colleagues or anyone who might be interested in staying on top of developments in the pensions world.