Articles in this edition cover:
- PASA publishes counter fraud guidance
- PASA publishes GMP Equalisation Guidance on Conversion
- PASA publishes guidance on Administration
- HMRC Pensions Scheme Newsletter 131
- Countdown bulletin 55
- New PLSA Chair
- Stronger Nudge to pensions guidance
- DWP CDC draft regulations consultation
- NMPA consultation response, draft legislation and policy paper
- TPR’s AE guidance updated
- Mandatory Scheme Pays extension
- FCA research shows more than £2m has been lost to pension scammers
- Government response to WPC report on pension scams
- DWP extends TPO’s term of office
- PPF v Hughes (Court of Appeal)
- Pensions Dashboard Programme recruits providers for testing phase
On 1 July 2021, the Pensions Administration Standards Association (PASA) published its Counter Fraud Guidance for UK pension schemes, trustees and providers after industry research revealed that fraud costs £6.2bn per year.
The guidance encompasses the types of fraud affecting the pensions sector and outlines the range of tactics that need to be adopted to counter pensions fraud so proactive steps can be taken to minimise its extent and cost.
In particular, the guidance is focussed on three main areas, including the legal and regulatory landscape, such as whether the organisation understands different types of fraud and has sought relevant legal advice.
It is expected to be regularly updated by the PASA Fraud and Cybercrime Working Group to “match the speed of evolution of the phenomenon of the fraud itself”.
PASA has also published guidance for trustees striving to achieve GMP equality, providing examples of approaches that have been adopted or considered by “early adopters”. The guidance lists five conditions that must be met:
- Post conversion benefits must be at least actuarially equivalent to pre-conversion benefits
- Pensions in payment must not reduce
- Members must not be switching to defined contribution benefits
- Minimum contingent survivor benefits
- Certain procedural requirements must be met (including employer consent and member notification)
David Fairs, TPR Executive Director for Regulatory Policy, commented: “GMP equalisation is a hugely complex area, and this is a valuable addition to the portfolio of guidance provided by the industry working group. This guidance will help trustees understand which approaches are being taken in industry to deliver conversion, and the factors they need to consider”.
In a busy month for PASA, they have also published “The Journey to full eAdministration guidance: People and Technology Working Together”.
The guidance aims to support administrators, trustees and pension managers and sponsors to benchmark their own arrangements and set objectives and plan for investment in new technology opportunities.
It sets out four key stages for pension schemes, including upgrading systems and automating calculations and reporting.
Chair of PASA, Kim Gubler, said: “To meet the mandatory requirement to submit electronic data to the pensions dashboard by 2023, schemes need to start investing and planning now”.
On 30 July, HMRC released Newsletter 131. This covered the following topics:
On 26 July, HMRC released the next countdown bulletin 55. This covered the following topics:
On 30 June, MoneyHelper went live. This is the new consumer service replacing the legacy brands Money Advice Service, The Pensions Advisory Service and Pension Wise. Going forwards, anyone trying to access the legacy brand websites will be redirected to MoneyHelper. MoneyHelper is encouraging stakeholders to update their signposting and material to the new brand.
On 7 July, the Pensions And Lifetime Savings Association (PLSA) announced that Emma Douglas will become its new Chair on 14 October 2021 at the PLSA Annual General Meeting. She will initially serve for three years, but this can be extended up to a further three years.
The DWP has published a consultation on a Stronger Nudge to pensions guidance.
This consultation seeks views and evidence on the proposed regulations relating to occupational pension schemes to implement section 19 of the Financial Guidance and Claims Act 2018. The draft Occupational and Personal Pension Schemes (Disclosure of Information) (Amendment) Regulations 2021 propose to require the trustees and managers of schemes in scope to ensure individuals seeking to access, or transfer for the purpose of accessing, their pension flexibilities (generally, defined contribution benefits) have received or opted out of receiving appropriate pensions guidance.
The Financial Conduct Authority (FCA) will have a corresponding duty to make rules to implement section 18 of the Financial Guidance and Claims Act 2018 covering personal pension schemes (contract-based pension schemes).
The consultation runs until 3 September 2021.
The DWP has published a consultation on draft regulations (The Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2021) that set out what Collective Defined Contribution (CDC) schemes must do to become authorised, to operate effectively in the market under regulatory oversight, and what happens if changes need to be made to their schemes.
Within the consultation, there are questions about some elements of the draft regulations, and the DWP would also welcome broader views on whether the regulations effectively deliver the intended outcomes.
The consultation runs until 31 August 2021.
HM Treasury has published the Government’s response to the consultation Increasing the Normal Minimum Pension Age (NMPA) published in February 2021.
The Government will legislate in the Finance Bill to increase the NMPA from 55 to 57 on 6 April 2028. This is the age at which most members of registered pension schemes can draw benefits without incurring unauthorised payment charges (unless they are taking their pension due to ill-health). Increasing the NMPA reflects increases in longevity and changing expectations of how long we will remain in work and in retirement. Raising the NMPA to age 57 could encourage individuals to save longer for their retirement and so help ensure that individuals will have financial security in later life.
The increase to the NMPA was announced in 2014 following a consultation and reconfirmed earlier this year. Members of uniformed public service pension schemes and those with unqualified rights to take their pension below age 57 will be protected from these changes. After considering consultation responses, individuals will be able to keep their protected pension age if they transfer their pension.
TPR’s guidance for Automatic Enrolment (AE) has been updated. Details of the changes made can be found at the beginning of each section.
HMRC and HM Treasury have launched a consultation on draft legislation to extend the deadlines for mandatory Scheme pays.
The draft legislation will extend the deadline for when the scheme administrator must report and pay the Annual Allowance (AA) charge, so that the deadline for paying the charge relates to when the scheme administrator received the members request to settle the charge via Scheme pays, rather than a fixed period after the end of the tax year to which the charge relates.
The measure will have effect from 6 April 2022 but will be retrospective from 6 April 2016 and is relevant for individuals who have retrospective increases in UK tax-relieved pension contributions or an entitlement that is greater than the AA in a tax year.
Research from the FCA has found that, despite 68% of pension holders claiming they were confident they could spot the signs of a pension scam, only 28% realised that a free pension review was a sign of a scam and just 40% knew to be wary of opportunities to transfer your pension.
There were 28% of respondents who said that they felt more at risk of a pension scam now than before Covid-19, and of those who felt more at risk, 65% felt that scammer tactics had become more sophisticated and harder to spot during the pandemic.
The FCA have urged pension holders to “flip the context” when approached with pension offers “by imagining the same offer in person, in an everyday, offline setting like a trip to the shops or an afternoon in the pub”. Alongside a reminder of key warning signs of scams and a quiz, the campaign seeks to make scams “easier to spot and avoid”.
The FCA reported that a total of £2,241,774 has been lost to pension scammers since the start of 2021, with an average loss of £50,949, which is more than double last year’s average.
On 6 July, the Work and Pensions Committee (WPC) published the Governments’ response to the Committee’s report on pension scams.
The Government rejected the Committee’s recommendation that the forthcoming Online Safety Bill should tackle online fraud facilitated through paid-for advertising, such as adverts for pension products on search engines. Instead, the Government plans to consult on online advertising regulation later in the year.
In a letter responding to the Committee’s report, the FCA said that online advertising is “the major source of problems leading to very significant consumer harms”.
The DWP has confirmed that it has extended the term of Anthony Arter as The Pensions Ombudsman (TPO) for another year.
In a letter to WPC chair Stephen Simms, Minister for Pensions and Financial Inclusion Guy Opperman stated that Mr Arter’s term will be extended for a period of 12 months from 1 August 2021.
The Court of Appeal have supported the PPF’s approach for increasing payments to PPF and Financial Assistance Scheme (FAS) members following the 2018 European Courts of Justice judgment in the Hampshire case.
It also confirmed the High Court’s decision that the PPF compensation cap, as set in legislation, is unlawful based on age discrimination and has to be disapplied.
However, the period of time over which the cap has to be disapplied is not yet clear, and as such, the Secretary of State for Work and Pensions has been granted more time to address the Court on this complex legal issue.
The PPF will therefore continue to pay members their current level of benefits until they’ve had time to understand the detail of the judgment.
The Pensions Dashboard Programme has signed up seven major data providers to its initial Alpha test phase of pension dashboards.
The participating employers announced are Aquila Heywood, Aviva, Capita, ITM, Legal and General, Mercer and Phoenix Group.
The firms represent a potential combined provider coverage of more than 30 million pensions which will eventually be accessible to consumers via the pension dashboards.
During this stage, with the seven organisations, PDP will develop dashboards technology and ensure that its processes make onboarding as easy as possible.
PDP says it will expand the number of volunteer data providers it works with from summer 2022.
Compulsory onboarding to the dashboards ecosystem will commence in 2023.
This Pensions Spotlight does not constitute advice, nor should it be taken as an authoritative statement of the law.