UK: The Pensions Brief - September 2018

Last Updated: 8 October 2018
Article by Ian Wright and Jay Doraisamy

Issues affecting all schemes

Trustee investment and disclosure duties

The government has confirmed that it will introduce new investment and disclosure duties for trustees of UK pension schemes from October 2019 and October 2020. The government intends to proceed with the majority of its original proposals, but has made a couple of changes. The most significant of these is removal of the requirement for schemes to prepare a statement on members' views. In summary:

  • Trustees of all schemes will need to update their statement of investment principles (SIP) to include new information, including the extent to which (if at all) they take into account members' views. They will also need to include new information in the scheme's annual report.
  • Trustees of schemes providing DC benefits other than additional voluntary contributions (AVCs) must also update the SIP for the scheme's DC default arrangement and include new information in the scheme's annual report. Trustees must also publish the scheme's SIP and certain other information on a website which is publicly available free of charge. Trustees are already required to publish certain sections of the scheme's annual governance statements for scheme years ending on or after 6 April 2018 on this website.

The regulations making the changes have been laid before Parliament. For more information, please see our legal update.


Trustees should ensure that they factor the new requirements into their scheme planning, and make arrangements to comply with the requirements by the relevant deadlines.

Pensions Ombudsman/TPAS signposting

The government and the Pensions Regulator have released a joint statement confirming that, although legislation has not yet been amended to reflect the transfer of TPAS' dispute resolution function to the Pensions Ombudsman, the Regulator will not apply penalties where schemes have updated their signposting wording to reflect the transfer and, as such, are technically in breach of the legislation.


If they have not done so already, trustees should consider updating their scheme's signposting wording to reflect the transfer of TPAS' dispute resolution function to the Ombudsman.

Non-financial injustice – Pensions Ombudsman compensation

The Pensions Ombudsman has published revised guidance on compensation for non-financial injustice such as distress and inconvenience. The guidance introduces fixed amounts for such compensation as follows:

  • nominal injustice – no award
  • significant injustice – £500
  • serious injustice – £1,000
  • severe injustice – £2,000
  • exceptional injustice – more than £2,000


No action required, but schemes may wish to factor the revised guidance into any decisions they make on offering compensation to members who make complaints under the scheme's internal dispute resolution procedure.

Workplace pensions regulation – Pensions Regulator approach

The Pensions Regulator has announced a new approach to workplace pension regulation which will see an increasing number of schemes coming under greater Regulator scrutiny.


No action required.

Pensions Ombudsman – provision of information to terminally ill members

The Deputy Pensions Ombudsman has decided that an employer should have given a terminally ill member the option of bringing forward his retirement date to ensure that he died in retirement, thereby increasing the benefits payable on his death.


Employers and trustees should consider carefully what information and options should be given to terminally ill members.


2019/2020 Pension Protection Fund levy – draft rules

The Pension Protection Fund (PPF) has published its draft 2019/2020 levy rules and accompanying guidance for consultation. The draft rules contain relatively minor changes to the rules for the 2018/2019 levy, but include new rules for charging a levy for commercial DB consolidation vehicles. The PPF has also announced a levy estimate for the 2019/2020 levy year of £500 million, down from £550 million for the 2018/2019 levy year. The consultation closes on 25 October 2018.


Trustees and employers of DB schemes should keep the progress of the consultation under review. In addition, trustees of schemes with a Type A contingent asset (group company guarantee) should check whether they will need to re-execute the guarantee in order for it to be re-certified for the 2019/2020 levy.

PPF compensation regime – compliance with EU law

The Court of Justice of the EU (CJEU) has held that the EU Insolvency Directive requires member states to ensure that, where an employer enters insolvency, each member of its occupational pension scheme(s) receives at least 50% of their benefits under the scheme. The decision means that the PPF compensation regime does not fully comply with the Insolvency Directive as some members with particularly large pensions may receive less than 50% of their benefits as a result of the PPF compensation cap and the restrictions that the PPF applies to pension increases.


No action currently required – the government has not yet responded to the CJEU's decision.


Master trusts – authorisation applications

The Pensions Regulator has published forms and guidance for use by master trusts in applying for authorisation. The areas covered by the forms include:

  • the fit and proper person checks;
  • systems and processes;
  • scheme financial details; and
  • the scheme funder.

An application index has also been published. In addition, the Regulator has published a report on the authorisation readiness review that it conducted in the summer. The report sets out four key tips for schemes applying for authorisation, as well as providing detailed feedback on each of the authorisation criteria.


Trustees of schemes which fall within the definition of a "master trust scheme" should ensure that they submit their authorisation application by 31 March 2019.

DC reporting obligations – statutory guidance

The government has updated its statutory guidance on reporting DC costs, charges and other information to reflect the new DC disclosure duties which came into force from 6 April 2018, and those which will come into force from 1 October 2019 and 1 October 2020.


Trustees of schemes which provide DC benefits other than AVCs should ensure that they have made arrangements to comply with the disclosure duties that came into force in April 2018, and that they make arrangements to comply with the duties that will come into force in October 2019 and October 2020.

21st century trusteeship – new guidance

The Pensions Regulator has added guidance on obtaining value for DC members to its 21st century trusteeship web resource.


No action required, but trustees of DC schemes may find the guidance useful when carrying out their value for members assessment.

DC governance – updated guidance

The Pensions Regulator has updated the following DC governance guidance documents:


No action required, but trustees of DC schemes may find the updated guidance helpful.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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