Pensions Weekly Update – 3 November 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 launched a consultation on increasing the levy ceiling for the fraud compensation fund. Occupational pension schemes pay a levy each year, based on the number of members in a scheme. Currently, the levy ceiling is set at 75p per member (but 30p per member for master trusts). The proposal is to allow the Pension Protection Fund (PPF) to set the rate up to a maximum of £1.80 per member (65p for members of master trusts). The government estimates that this would allow the PPF to repay a loan to be made to the PPF, for the purposes of covering anticipated additional costs, by 2031. The anticipated additional costs arise out of the case of PPF v Dalriada, in which it was decided that pension schemes used as pension liberation vehicles could, if certain conditions were met, make a claim against the fraud compensation fund. Consultation closes on 10 December 2021.
A private members’ bill is currently making its way through Parliament. The intention of the bill is to make it easier for trustees to rely on the DWP’s methodology for GMP conversion. There are about 20 private members’ bills each year, and not all of them are passed, so it remains to be seen how successful this will be.
In last week’s Budget, the Chancellor confirmed that top-up payments will be made directly to low earners who make pensions contributions through a net pay arrangement from 2024/25 onwards. He also confirmed that the government will consult on further changes to the charge cap in defined contribution schemes used for auto-enrolment “to unlock institutional investment to support some of the most innovative businesses”. As announced in the spring, the Lifetime Allowance will remain frozen at £1,073,100 until April 2026.
The Pensions Regulator (TPR) has issued its first climate adaptation report. The purpose of the report is to set out the specific risks to occupational pension schemes posed by climate change and the steps that TPR is taking to address those risks. It also takes a look at whether pension schemes are adapting to the risks of climate change and how well they are complying with the new regulatory regime requiring governance and reporting measures in connection with climate-related risks and opportunities.
The government has published its outcome of consultation in relation to mandatory reporting for large companies, listed companies and large LLPs in line with the recommendations of the Task Force on Climate-related Financial Disclosures. The new requirements are expected to come into force on 6 April 2022. This should better assist pension trustees with investments in such companies to perform their own governance and reporting obligations in relation to climate-related risks and opportunities.
HMRC has published pension schemes newsletter 134, which extends certain COVID-19-related easements until 31 March 2022. These relate to relief at source repayment claims, relief at source declarations and submitting the registered pension schemes annual statistical return without a signature.