Articles in this edition cover:
- MaPS launches new standards for guidance
- Pensions Dashboard - TPR urges schemes to digitise records
- Finance Bill receives Royal Assent
- Britvic wins appeal to changes pension scheme’s inflation measure
- Triple Lock could cost £4bn
- Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill introduced
- New chair of PPF
- PASA publishes data report
- PLSA publishes blog on pensions dashboards
- PDP engaging people with pensions via digital dashboards
- High Court confirms how limitation and forfeiture apply to underpayments of pension
- PRAG publishes pension fraud risk guidance
- HMRC Newsletter 130
- UK adequacy decision adopted
- FCA workplace pension providers costs and charges
The Money and Pensions Service (MaPS) has announced the launch of its “MaPS standards”.
The MaPS Standards have been developed by a wide range of subject matter experts and set out the core principles for the effective delivery, quality and performance requirements of MAPS’ Debt Advice, Pensions Guidance and Money Guidance functions.
Chief Executive of MaPS, Caroline Slarklewicz, said: “The MaPS Standards will set the bar for how we should be working to support, engage and deliver for our customers and they will become a fundamental part of our core operating model”.
MaPS has also released a beta version of its MoneyHelper consumer website. The service, which will consolidate the MaPS’ legacy brands, including Pension Wise, was first announced in March. The beta site will allow MaPS to continue testing the service and gather feedback ahead of its full launch.
In their latest podcast, TPR has urged pension schemes and their providers to both improve member data and the way the data is stored ahead of the launch of the pensions dashboard.
Business lead at TPR, Louise Sivyer, noted that some older workplace pension schemes still used paper-based filing systems. This needs to be remedied well before pension dashboards are implemented.
From a pensions perspective, the Act included freezing the Lifetime Allowance at its 2020/21 level of £1,073,100 until 6 April 2026 at which point the Allowance will start attracting annual CPI increases again. It also contained confirmation that the Income Tax Personal Allowance and Higher Rate Threshold will be maintained until 5 April 2026 at the levels they increased to on 6 April 2021: £12,570 and £50,270, respectively.
As a result of its appeal against a ruling by the High Court in January 2020, drinks company Britvic will be allowed to switch the inflation index measure used for its DB pensions scheme, the Britvic Pension Plan, away from the Retail Prices Index (RPI).
After initially seeking court approval to switch measures in August 2019, the High Court had ruled the company could not change from RPI to the Consumer Prices Index (CPI) on the basis that the
After initially seeking court approval to switch measures in August 2019, the High Court had ruled the company could not change from RPI to the Consumer Prices Index (CPI) on the basis that the words “any other rate” in the scheme rules were meant to mean “any higher rate” and the person who drafted the rules had used the incorrect term. However, the Court of Appeal has now said that it has not been a “clear mistake” in the wording of the scheme rules, ruling that the wording was to be interpreted literally and that Britvic could now change its scheme inflation measure.
Chancellor of the Exchequer Rishi Sunak has been warned that he will have to spend £4bn more on pensions from next year if he honours the party’s “triple lock” pledge.
Average Earnings data released in June showed a rise of 8.4% in the 12 months to April, whilst data showed CPI inflation increased to 2.1%.
Under the triple lock policy, the basic state pension and the new state pension are increased by the highest of the growth in average earnings, the growth in prices as measured by the CPI, or 2.5%. The growth in wages has been distorted by wages being compared to last year when millions of people were receiving just 80% of their salaries on the furlough scheme.
The Pensions Schemes (Conversion of Guaranteed Minimum Pensions) Bill has been introduced in the House of Commons as a Private Members’ Bill.
The Bill is intended to make provision about the amendment of pension schemes so as to provide for the conversion of rights to a GMP. Margaret Ferrier, Independent MP for Rutherglen and Hamilton West, is sponsoring the Bill, saying it will help “reassure occupational pension schemes that they are able to use the methodology published in DWP guidance to level the effective differences between pension amounts paid out to men and women”.
The Bill is scheduled for its Second Reading on 26 November 2021.
The DWP has announced that Kate Jones has been appointed as the new Chair of the PPF. Ms Jones took up her post on 1 July 2021, having been a non-executive member of the PPF board since February 2016.
Ms Jones said: “I am proud to have the opportunity to lead the PPF in the next important phase of its evolution as we look to our future challenges, while always ensuring we’re able to continue to offer the very best protection to those who rely on us.”
PASA’s Data Working Group has published a report titled “Data is at the heart of every scheme”, reminding schemes of key areas impacted by inadequate data management. It calls on the industry to require “a much greater emphasis on data”.
The PLSA has published a blog outlining how pensions dashboards “will transform the experience of pension saving by enabling savers to see the overall value of all their different pension entitlements”.
The blog looks at the challenges that lie ahead and the next steps for the Pensions Dashboard Programme.
The Pensions Dashboard Programme (PDP) has published a rapid evidence assessment to assist the Money and Pensions Service in guiding the development of pensions dashboards in the UK. The report gathers evidence about the barriers and enablers to engagement with pensions and dashboards, as well as the evidence on the optimal functionality and presentation of dashboards.
In the report, the key barriers to engagement include inertia, present bias, friction costs, choice overload and lack of knowledge or ability.
The High Court has handed down its judgment in a rectification claim relating to the Axminster Carpets Group Retirement Plan (Punter Southall Governance Services Limited v Jonathan Hazlett (2021)). In the absence of a representative beneficiary being identified from the Plan membership, Jonathan Hazlett, head of Osborne Clark’s pensions advisory team, was appointed as representative defendant in this case. The judgment provides some additional clarity for any schemes facing past underpayments, including as part of a guaranteed minimum pension (GMP) equalisation exercise and those planning to wind up in the near future.
The case was prompted after scheme trustees identified legal uncertainties with various instruments historically executed in relation to the scheme.
The trustees reached a compromise with the representative defendant, which saw members, at first sight, owed arrears, primarily because the pension increases they had historically received did not reflect the increases to which they were legally entitled. There were concerns as to whether those arrears could or should be forfeit under the scheme's rules and whether, in any event, claims for arrears were time-barred under the Limitation Act 1980.
Mr Justice Morgan had previously decided in the Lloyds case that claims for arrears were not statute-barred, he also heard extensive argument on limitation in Axminster Carpets, with this case now viewed as “the leading judgment on this area of practice”. Morgan did affirm his conclusion from Lloyds that ruling that it was not enough that a member had asked for their pension to be paid before their pension came into payment, but that it was necessary for members specifically to make a claim for the arrears to which they were entitled.
In relation to the scheme-specific rules, Morgan concluded that Clause 25 of the 1992 scheme deed did not operate as a forfeiture clause as it does not contain wording that directly deals with the forfeiture of an entitlement to arrears. Rule 36 of the 2001 scheme deed, however, was found to operate to forfeit underpaid pensions, with Morgan taking a similar approach to that seen in the Lloyds case and concluding that the words "a benefit" in Rule 36 do not refer to the right to a pension from retirement. He concluded that if an instalment was due on a date and part of the instalment was paid, the relevant "benefit" for Rule 36 is the part that was not paid.
Commenting on the judgment, a spokesperson for Osborne Clarke said: “Where trustees discover past underpayments of pension scheme benefits, including as part of their GMP equalisation project, the position on limitation is now very clear; no limitation period applies and, as such, historic claims may still be valid. While the decision on the purported forfeiture provisions is scheme-specific, the judgment provides helpful guidance on interpreting provisions which purport to remove a member's right to unclaimed pension.”
The Pensions Research Accountants Group (PRAG) has published guidance on the types of fraud that pension schemes may suffer and how schemes can manage the risks of pension fraud. The guidance is intended for pension scheme trustees and managers, and it seeks to help them consider where the fraud risks may lie in their schemes, setting out a number of case studies for the main fraud types. The guidance is available to PRAG members on its website.
On 25 June, HMRC published the next Pension Scheme Newsletter 130. This covered the following topics:
- Extensions to some of the temporary changes to pension processes
- Managing the Pension Scheme service
- Signing in to online services
- SIPPS and SSAS Pensions – connected tenants
On 28 June, the EU commission announced that it has adopted two adequacy decisions for the United Kingdom - one under the General Data Protection Regulation (GDPR) and the other for the Law Enforcement Directive.
The Information Commissioners Office (ICO) made a statement in response to the announcement.
This means the EU has determined the UK’s data protection laws to be robust enough to ensure data can safely flow to the UK from the EU (and EEA).
The FCA has announced that the first publication of data under these new rules is expected to take place this summer, when Independent Governance Committees publish their annual reports. The regulator has also set out its expectations of data supplied by providers.