Regular round-up of the latest pensions, investments, trusteeship and scheme management news
Current Issues - February 2021
03 Feb 2021
See excerpts from this month's articles below (to read more, please download our latest Current Issues):
Pension Schemes Bill progress report
The Pension Schemes Bill 2019/21 has cleared its final stage of Parliamentary scrutiny and needs only Royal Assent to make it onto the statute book. Secondary legislation will be required to bring its provisions into force and add details. In the course of business, Government spokespersons gave assurances about the revamped defined benefit (DB) funding regime, and said that none of the new regulatory powers and criminal offences will be retrospective.
TCFD reporting & governance consultation: Government response
The Department for Work and Pensions (DWP) has announced the outcome of last year’s consultation on requiring large schemes to disclose their approaches to managing climate-change risks. It also published draft regulations for consultation, and updated the non-statutory guidance drawn up by the Pensions Climate Risk Industry Group (PCRIG).
DC charge cap stays: new minimum fund for flat fees
The Department for Work and Pensions (DWP) has announced the outcome of its review of the statutory charge cap, concluding that it should retain the existing 0.75 per cent per annum limit, for now. It plans, however, to legislate to prevent the application of fixed fees to default pension pots worth less than £100.
Funding Code consultation: a holding letter from the Regulator
The Pensions Regulator has published an interim response to first of two consultation exercises about a proposed overhaul of the defined benefit (DB) scheme funding Code of Practice. The interim response is only six pages long, but acknowledges the main concerns that have been raised about the initial consultation proposals. The Regulator promises to consider the submissions and make use of what it learns for the second consultation exercise, which will present a draft of the Code and is likely to arrive 'in the second half of 2021'.
PPF finalizes 2021/22 levy rules
Further to an announcement made in December 2020, the Pension Protection Fund (PPF) has published its final levy rules for 2021/22. The rules formalize plans to collect an estimated total £520 million in levies, with reductions for smaller schemes. The PPF also published a draft version of guidance on its approach to commercial consolidators (‘superfunds’).
Auto-enrolment qualifying earnings and trigger 2021/22
The Department for Work and Pensions (DWP) has announced the outcome of its annual review of the automatic enrolment qualifying earnings band (upon which minimum contributions and benefits are based) and ‘earnings trigger’ (above which jobholders must be enrolled automatically).
Viral news – January 2021
The Pensions Regulator has updated its DC scheme management and investment: COVID-19 guidance for trustees to add a section headed 'Transfer requests where all or part of the investment is gated'.
Purple Book 2020
The Pension Protection Fund (PPF) has published the Purple Book 2020, which looks at the risks faced by defined benefit (DB) schemes in the year ending March 2020. This edition provides data on 5,318 DB schemes, representing 99.8 per cent of the schemes eligible for PPF compensation. Unsurprisingly, given the current pandemic, the net funding position of DB schemes on a section 179 valuation basis (as used for PPF levy purposes) worsened to a deficit of £90.7 billion, compared to a deficit of £12.7 billion as at 31 March 2019.
FRC SMPI accumulation rate assumptions
The Financial Reporting Council (FRC) has published the results of its annual survey of the accumulation rates used or statutory money purchase illustrations (SMPI). The survey contains the responses received between July and October 2020 from 18 providers (responsible for issuing over 26 million SMPIs).