Pensions Weekly Update – 23 June 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 Department for Work and Pensions (DWP) has issued a consultation on the future of defined contribution (DC) schemes and the case for greater consolidation. Evidence is sought on barriers and opportunities for consolidation of schemes with between £100 million and £5 billion of assets under management. This is part of the government’s aim to have “fewer, larger schemes going forward”.
The DWP has responded to two consultations on DC pensions, covering a multitude of issues. Regulations will require all relevant occupational DC schemes (broadly, schemes other than public service schemes, schemes that provide no money purchase benefits except those attributable to additional voluntary contributions, relevant small schemes and executive schemes) to state the return on investments, net of transaction costs and charges for their default and self-select funds. This applies for scheme years ending after 1 October 2021. The information must be included in the chair’s statement and issued on a publicly accessible website. More information is contained in statutory guidance. Additionally, for scheme years after 31 December 2021, DC schemes with less than £100 million of assets that have been operating for at least three years will be required to demonstrate annually that they offer value for members comparable with larger schemes. Where a scheme does not satisfy the standards, trustees will be expected to wind up the scheme and consolidate unless (exceptionally) immediate improvements can be made. Hybrid schemes, where the defined benefit and DC assets together are less than £100 million, will be required to undertake a value for member assessment on the DC element. The consultation response also sets out the DWP’s conclusions and further steps on its ongoing work to assess whether the charge cap applying to the default funds of DC schemes used for auto-enrolment presents a barrier to investing in some illiquid assets. Clarity is also provided on costs and charges illustrations, including amendments to statutory guidance.
The Pensions Management Institute (PMI) has launched an accreditation programme for lay trustees. The academic side to the qualification will be the same as it is for professional trustees seeking accreditation. Trustees wishing to take advantage of the lay trustee accreditation will be required to complete the trustee toolkit run by The Pensions Regulator (TPR) and both parts of the PMI's certificate in pension trusteeship in order to become accredited and have the designation LTPMI (accred). They will also be required to undertake 15 hours of relevant continuing professional development each year and to complete any new and updated modules to the trustee toolkit.
In May, we reported that TPR and the Financial Conduct Authority (FCA) had joined forces to issue a call for input, inviting views on what TPR and the FCA could do to help engage consumers so that they could make informed decisions leading to better savings outcomes. The deadline for submissions has now been extended to 30 July 2021.
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The fifth factsheet in our #PensionsTensions: New Dimensions series addresses key risks in legal and regulatory risks with some useful hints and tips.
Join us for our webinar, #PensionsTensions: Proportionality and The Pensions Regulator's Draft Single Code of Practice, on 1 July 2021, to hear about the key elements of TPR’s draft single Code of Practice and how trustees can adopt a reasonable and proportionate approach to meeting TPR’s expectations.