Pensions Weekly Update – 28 April 2021

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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 Pensions Policy Institute (PPI) is a not-for-profit educational research organisation. It has published its third report in a series looking at how environmental, social and governance (ESG) strategies have become an increasingly important component in pension schemes' investment strategies. Its research found that 65% of schemes surveyed felt that their scheme was doing enough in terms of ESG issues, while 35% thought that they were not doing enough. The report addresses five areas of development, which would allow trustees to effectively account for ESG risk in their investment strategies. It also considers the barriers that schemes face when approaching ESG factors, including (1) the large quantity and inconsistent quality of information available on ESG risks, (2) availability, cost and divergence of ESG metrics, and (3) dependence on third parties for engagement and stewardship.
In December, we noted that pension schemes with the benefit of an EU group company guarantee or other security might incur extra cost and timing issues if trustees ever need to enforce the terms of the guarantee/security in circumstances where no reciprocal arrangements are reached with the EU in relation to the enforcement of judgments. While some of this uncertainty has been removed, because the UK is a party to the Hague Convention (which governs agreements containing exclusive jurisdiction clauses), the position in relation to agreements containing non-exclusive jurisdiction clauses (including most PPF contingent asset agreements) remains uncertain. It was hoped that the UK would become a party to the Lugano Convention in its own right, which would have put the UK back in the position it was in before 1 January 2021, so far as the enforcement of judgments is concerned. However, recent reporting indicates that it is looking less likely that the UK will be admitted to the Lugano Convention. While all parties to the Lugano Convention, other than the EU, have approved the UK's application to become a party to the Lugano Convention, the EU has not yet reached a decision. Under the convention, the EU had an obligation to endeavour to reach a decision by 14 April 2021. Trustees should keep this under review and take advice if they have any concerns.
The government plans to consult on measures to tackle online fraud later this year. In response to a question in the House of Commons, Caroline Dinenage, Minister of State for Digital and Culture, provided a written answer stating that “the growth and scale of online pensions scams, and online fraud more broadly, is deeply concerning.” This follows a report issued by the Work and Pensions Committee last month, which highlighted activity such as online advertising from scammers and fake websites. There is increasing pressure for the government to ensure that pension scams are addressed in the Online Safety Bill, which is expected to be put before Parliament later this year and is set to introduce a new duty of care to make companies take responsibility for the safety of their users.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.