Summertime is traditionally quiet in terms of legal and regulatory developments, but this year is an exception. Here are a few highlights from July.
An uncertain bill
At the time of writing, the timetable for the next pensions bil is uncertain. It was reported in early July that the DWP needs more time to legislate for new models of defined benefit consolidator schemes. However, we are still expecting a pensions bill (possibly in October) to grant new powers to The Pensions Regulator (TPR), facilitate the pensions dashboard and define collective defined contribution schemes. Frank Field MP has written a letter to Guy Opperman MP, asking for clarity.
On 11 July 2019, the High Court issued a judgment in which it considered a police authority was liable for negligent misstatement. The authority had issued correspondence to retiring police officers referring to ‘tax free’ pension commencement lump sums, when it ought to have known that the immediate re-employment of the police officers in a civilian role would trigger tax charges. The tax charges would not have been triggered had the officers taken a one-month break in employment, but they did not do so as they were not made aware of this requirement. This is a simple summary of some complex issues, but it serves as a reminder of the care that is required when issuing member communications. The case also illustrates the complicated status of communications between employers, scheme administrators and scheme members.
Consultation and guidance
On 29 July 2019, the DWP issued a consultation to bring into legislation the Competition and Market Authority’s (CMA) Order in relation to investment consultancy and fiduciary management services. Following the CMA’s recommendation, TPR issued draft guidance for consultation on 31 July 2019 to help trustees comply with the new requirements. TPR’s consultation includes how to choose an investment model, objective setting and competitive tendering for fiduciary management services.
Clarity (and good news!)
TPR has issued a statement confirming that it will be consulting later this year on changes to codes of practice to reflect the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018. These regulations, which came into force on 13 Jan 2019 as a result of the IORP II Directive, require schemes to establish an effective system of governance proportionate to the size, nature, scale and complexity of their scheme. The regulations set out what TPR must include in its codes of practice. Trustees will need to be able to demonstrate that they have an effective system of governance within 12 months of the publication of the updated code.
Whilst undertaking this review, TPR also plans to combine the content of the current 15 codes of practice into one shorter code which will be “quicker to find, use and update”. This will come as very welcome news for those who struggle to find their way through the jungle of TPR’s material.
Lynn M. Housecroft
Professional Support Lawyer – Squire Patton Boggs (UK) LLP