Pensions Weekly Update – 12 October 2022

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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 published a consultation document on draft regulations and draft statutory guidance relating to (1) “disclose and explain” requirements in relation to a defined contribution (DC) scheme's asset allocation and (2) the exemption of performance-based fees from the regulatory charge cap. The consultation includes the DWP's outcome of its March 2022 consultation on facilitating investments in illiquid assets by DC schemes. The proposals also extend certain provisions to qualifying collective money purchase (CMP) schemes. Trustees of schemes that are in scope of the draft regulations would be required to include a new asset allocation “disclose and explain” section in the chair's statement for the first scheme year ending after 1 October 2023. Complementing that, trustees of schemes that are in scope would be required to include a new illiquid investment policy in their default fund's statement of investment principles (SIP). In relation to qualifying CMP schemes, the policy would appear in the main SIP. This requirement would apply to SIPs first published after 1 October 2023 and at the latest by 1 October 2024. The draft regulations also include provisions setting out the exemption to exclude specific performance-based fees from the charge cap. Provisions relating to performance-based fees and the charge cap are expected to be effective from 6 April 2023. Consultation closes on 10 November 2022.
The Pension Administration Standards Association (PASA) has published good practice guidance on DC transfers. This takes account of the impact of recent legislation on pension transfers, including regulations that were introduced in November 2021 to assist in combatting pension scams. The guidance also includes an updated transfer template with a DC focus.
The Financial Conduct Authority (FCA) has published a letter to the DWP providing an update on progress that it has made in relation to recommendations made last year by the Taskforce on Pension Scheme Voting Implementation. The FCA has focused on three main areas: asset owners' expressions of wish; asset managers' voting policies; and asset manager vote reporting.
The government has confirmed that those provisions of the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 issued by the Competition and Markets Authority (CMA) that impose prohibitions and obligations on pension scheme trustees, including in relation to compliance reporting, have ceased to be in force. This is on the basis that equivalent provisions are now in force via DWP regulations, with The Pensions Regulator taking over to ensure compliance by pension trustees. We are assuming that the CMA (as a government department) also agrees that its order has ceased to apply, albeit it has not specifically confirmed this.
The chancellor has published a letter to the Treasury Select Committee stating that he intends to bring his medium-term fiscal plan forward to 31 October 2022. The Office for Budget Responsibility's economic and fiscal forecast will also be published on that date. Unusually, the date chosen for the fiscal plan falls on a Monday. There is no news yet about publication of a finance bill, but a colleague in our tax team has pointed out that the chancellor will be giving his fiscal statement on Halloween. Does this mean that it might include some horrors?
We have published our autumn Hot Topics in Pensions, which covers a few more ups and downs in pensions over the last quarter.