Pensions Weekly Update – 31 March 2021

Authors:

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.

The Work and Pensions Committee (WPC) has published its first report following its inquiry into protecting pension savers. The first report focuses on pension scams and notes that the Pension Scams Industry Group estimates that £10 billion has been lost by 40,000 people to pension scams since pension freedoms were introduced in 2015. A key recommendation from the WPC is that paid for advertising on online platforms should be covered by the regulatory framework for financial promotions. The WPC calls it “immoral” that online social media companies benefit from advertisement fees paid by a pension scammer while also accepting advertisement fees from regulators warning against the same pension scam.
The Department for Work and Pensions (DWP) has issued a call for evidence on how pension scheme trustees understand social factors and how they are included in their Environmental, Social, and Governance (ESG) policies. “By considering the risks – and opportunities – relating to supply chains and communities, employees and business models, local economies and landscapes, investment strategies can better deliver long-term value” (Guy Opperman). The call for evidence differentiates between social impact investing and “social” in ESG. While the DWP says that the government does not expect trustees to fix public issues like health, it does make some suggestions as to what trustees might consider to be social factors (including those extracted in the quotation above).
The Pensions and Lifetime Savings Association and the Association of British Insurers have formed a co-ordination group to implement recommendations put forward by the Small Pots Working Group in December 2020. The co-ordination group will focus on the administration processes that would underpin a consolidation model for small deferred money purchase pension pots. It will examine data-matching requirements, common data standards and the requirements for a low-cost transfer process for mass consolidation. The group will publish a progress report in summer 2021.
The Pensions Administration Standards Association has issued a guide for implementing a data management plan, which suggests ways of documenting the data held by a pension scheme and a policy for managing it effectively. Further short guides on data management are expected over the coming months.
Further regulations have been published and came into force on 26 March 2021 extending various easements granted under the Corporate Insolvency and Governance Act 2020 in response to the pandemic. These include the relaxation of the sanction for wrongful trading, which has been extended until 30 June 2021 (although note that any wrongful trading would still be a notifiable event) and the easement in relation to the criteria for entering a moratorium period, which has been extended until 30 September 2021.
GMP equalisation is currently testing many pension trustees. Check out our latest Hot Topics, wholly dedicated to the practical issues arising from the “Lloyds 3” judgment, which many trustees will need to consider as part of their GMP equalisation projects.