Case Law
Preferred construction of revaluation rule determined - De La Rue Plc, De La Rue Holdings Ltd, De La Rue
International Ltd v De La Rue Pension Trustee Ltd, Mark Crickett [2022] EWHC 48 (Ch)
This case concerned construction of a rule dealing with revaluation of deferred benefits where if the wider construction was found to be correct the scheme's liabilities would be increased by in excess of £2m.
The rule in question provided for revaluation of deferred benefits on a statutory basis as required under the Pension Schemes Act 1993, however the rule also included a proviso that "This Rule shall only apply if it would provide a greater increase in deferred benefits than that provided at Rule 21". Rule 21 dealt with increases to pensions in payment and broadly allowed increases up to a cap of 5% per year subject to various requirements.
The High Court considered whether the comparison proviso was a provision included for the avoidance of doubt to make clear that the statutory requirements for revaluation are only intended to supplement any other increase provisions where they are required to do so, in order to comply with the terms of the statute. It was decided that was the case and that both paragraphs of the rule operated as descriptive restatements of what the law provides, but no more.
Noting that it "is often the case in disputes of this sort, the language of the offending rule is obscure and poorly expressed" the High Court preferred the narrower construction which provided for statutory revaluation.
New Law
Stronger Nudge to pension guidance on 1 June 2022
New guidance measures for DC savers in occupational pension schemes are set to come into force on 1 June 2022.
The "Stronger nudge to pension" guidance will require trustees and managers to ensure that members and their survivors (referred to as beneficiaries) have either received or opted out of receiving guidance from Pension Wise before proceeding with an application to receive, or transfer benefits. Beneficiaries will be able to opt-out of receiving guidance, but this must be an active choice on their part.
The new requirements include obligations for trustees/managers to offer to book a Pension Wise appointment, seek confirmation from a beneficiary that they have either received guidance or opted-out and also record such confirmation.
News
PPF Levy Rules for 2022/23
The levy rules for 2022/23 have now been published confirming that easements for levy payers introduced in the 21/22 levy year will remain in place including the Small Scheme Adjustment, lower cap on the risk-based levy and COVID-19 payment easement. As a result of the new rules it is expected that more than 80% of schemes will see a reduction in the levy amount they pay this year.
For those schemes that will not see a reduction a new limit is introduced for this year only to ensure that individual risk based levies will not increase by more than 25% compared to last year.
TPR reminds trustees to report scams
The Pledge to Combat Pension Scams, encourages schemes to do more to protect savers from scammers, including reporting suspected scams to the authorities – Action Fraud or by calling 101 in Scotland.
Noting that almost 400 pension schemes have joined its Pledge to Combat Pension Scams TPR is concerned that it has seen "little evidence that the pensions industry is reporting its suspicions and this lack of data makes it difficult to accurately determine the scale of the problem and put in place successful interventions.”.
PPF update on arrears payments
Further to the Court of Appeal’s judgments on the methodology for implementing the ECJ’s Hampshire decision and the PPF compensation cap the PPF has confirmed its approach on payments of arrears to PPF and FAS pensioners.
In respect of PPF pensioners is it confirmed that no time limits will be applied and that arrears will be paid from the time that pensioners started to receive compensation.
In respect of FAS pensioners it is acknowledged that whilst not directly affected by the Court ruling, some members will be entitled to arrears to ensure that they receive 50 per cent of the value of their accrued old age benefits. For such members it is confirmed that no time limit will be applied, but that interest on those arrears will not be paid.
The PPF expects it will take the rest of the year for payments of arrears to be deal with.
