New Law
Pension Schemes Act 2021 – Collective Money Purchase provisions in force
The Pension Schemes Act 2021 (Commencement No 5) Regulations 2021 bring into force with effect from 13 December 2021 various provisions of the Act relating to collective money purchase schemes including;-
- in relation to requiring TPR to put in place a code of practice in relation to authorisation of such schemes: and
- allowing regulations in relation to administrative charges in such schemes to be made.
Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill progresses
The Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill received its second reading in the House of Commons on 26th November. This Private Member's Bill, if enacted would amend the legislation under which schemes are allowed to convert Guaranteed Minimum Pensions (GMPs) into ordinary scheme benefits subject to fewer restrictions.
The measures included in the Bill would amend existing legislation enabling GMP conversion to:
- Clarify that the legislation applies to survivors as well as earners.
- Provide for a power to set out in regulations the conditions that must be met in relation to survivors’ benefits.
- Provide for a power to set out in regulations detail about who must consent to the conversion.
- Remove the requirement to notify HMRC.
A date for the committee stage of the Bill's consideration is to be announced.
News
CMA Reporting – Action required by 7 January 2021
The DWP have confirmed that publication of the response to consultation on trustee oversight of investment consultants and fiduciary managers and the associated regulations is delayed. This means that instead of being part of the annual scheme return as was proposed, Compliance Statements in accordance with the CMA Order will require to be submitted directly to the CMA again this year by 7 January 2022.
The CMA Order restricted trustees from either continuing to obtain Investment Consultancy (IC) services under an existing contract, or from entering into a new contract for the supply such services, unless they had set the provider strategic objectives There is a requirement to review the performance of each IC provider against their objectives at least every 12 months so this review must be carried out and a Compliance Statement submitted directly to the CMA by 7 January 2022.
The CMA Order sets out that a Compliance Statement shall confirm the extent to which the relevant applicable Articles of the relevant Part or Parts of the Order that were in force during the reporting period have been complied with during that period.
Trustees should submit relevant Compliance Statements as soon as possible to ensure compliance with the Order.
PPF starts uncapping process
Following the Court of Appeal’s ruling that the PPF compensation cap was unlawful the PPF has confirmed it has started making progress in relation to the removal of the cap.
In terms of progress the PPF have confirmed that so far:
- arrears due to those FAS pensioners who’d already received an increase as a result of the Hampshire ruling have been paid ahead of the target date of the end of 2021
- the cap is no longer applied to new PPF retirees
- the process to remove the PPF compensation cap has been started and they expect to scale up payments in the New Year.
The PPF expects that it will take until the end of 2022 before it's able to disapply the cap for the majority of currently-capped PPF pensioners. The question of whether a six time limit will be applied in respect of arrears of increases remains with the PPF who confirm they are in ongoing discussion with the DWP on this point.
PPF reveals 2021 Purple Book data
The latest PPF Purple Book (or The Pensions Universe Risk Profile as it is also known) covering 5,215 pension schemes eligible for PPF compensation at 31 March 2021 reveals that whilst scheme funding has improved overall just under half of these schemes remain in deficit with an aggregate deficit of £129bn. The improvement in overall funding is stated as being as a result of market movements rather that a proportional increase in scheme re-risking.
Noting that many of these schemes have individual deficits which would, if they were to claim protection from the PPF, have a significant impact on its balance sheet, the PPF confirm that its funding position is very strong and it remains confident in its ability to face future claims.
If you require any further information or support, please get in touch with our Pensions team.
