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Pensions Insights August 2021

31 August 2021

In our monthly update, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy. If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to contact your usual contact.

 

Case Law 

PPF cap confirmed as discriminatory - Hughes and Ors v PP Fund and Ors [2021] EWCA Civ 1093 

The latest installment of the Hughes case has now confirmed that the statutory cap on PPF compensation constitutes unlawful age discrimination and must be disapplied. 

A press release issued by the PPF notes that the period of time over which the cap has to be disapplied is not yet clear, and confirms that the Secretary of State for Work and Pensions has been granted more time to address the Court on this aspect. 

New Law 

Climate Change Regulations – in force on 1 October 2021

The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 come into force on 1 October 2021 and will apply to schemes with assets of £5 billion or more from that date and schemes with assets of £1 billion or more from 1 October 2022.

The regulations introduce new requirements reflecting the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) intended to ensure trustees embed effective climate change risk governance activities, and report publicly on how they have done so. This includes requirements relating to governance, strategy and risk management, requirements to select and calculate climate-related metrics and requirements for trustees to set and measure performance against targets.

TPR – New Criminal Offences Powers from 1 October 2021

Whilst a formal response is still awaited in relation to TPR's consultation on its proposed approach to the investigation and prosecution of the new criminal offences, it is anticipated that TPR's new powers will come into force on 1 October 2021.

The Pensions Regulator (Employer Resources Test) Regulations 2021 and Pensions Regulator (Information Gathering Powers and Modification) Regulations 2021 are also due to come into force on 1 October 2021.

News

Normal Minimum Pension Age Increase 

The Government has published its response to consultation on the increase of Normal Minimum Pension Age ("NMPA") from 55 to 57 on 6 April 2028. The consultation sought views on the increase including in relation to the introduction of a protected pension age ("PPA") to allow some scheme members to retain a NMPA earlier than age 57.

It has now been confirmed that certain members will be eligible for a PPA in a number of circumstances including:

  • all members of the armed forces, police and fire public service pension schemes would have PPAs even if their scheme rules did not confer a PPA on members on 11 February 2021
  • members of HMRC-registered pension schemes whose scheme rules on 11 February 2021 conferred an unqualified right for them to take their pension benefits earlier than age 57

A PPA will apply to all of a member's benefits (i.e. not just those accrued in advance of 6 April 2028) in the relevant arrangement and a window will be introduced so that individuals have an opportunity to join a pension scheme by 5 April 2023 where the scheme rules on 11 February 2021 already confer an unqualified right to take pension benefits below age 57 in order to have a PPA of 55. 

Provisions in relation to the increase in NMPA and PPAs are included in the draft Finance Bill 2022.

TPR consults on climate related governance and reporting guidance

Noting that from 1 October 2021, trustees of certain schemes face new reporting requirements intended to improve the quality of governance and reporting as they address climate-related risks and opportunities, TPR has launched a consultation on new guidance and an appendix to its monetary penalties policy intended to support new requirements on climate change.

The consultation documentation gives an indication of the evidence that TPR will require in order to assess whether trustees are meeting the requirements of the climate change regulations and following statutory guidance stating that they will be looking for clear evidence that trustees:

  • are taking proper account of climate change when making decisions about the scheme, and that advisers are assisting with this;
  • have carried out analysis in a way that is consistent with the Taskforce on Climate-Related Disclosure (TCFD) recommendations; 
  • have seriously considered the risks and opportunities that climate change will bring to the scheme, in its particular circumstances; and
  • have decided what to do as a result of this analysis and have set a target to achieve that goal.

Consultation closes on 31 August 2021.

PASA publishes further guidance on transfer payments

PASA's GMP- Equalisation Working Group has published further guidance on transfer payments. Noting that the Lloyds 2020 leaves many issues unanswered for both schemes which have paid transfer values and those which received them the guidance is intended to help address unresolved issues in a pragmatic and practical way.

if you require any further information, please get in touch with your usual DWF contact.

Further Reading