At a glance...
Issues affecting all schemes
PENSION SCHEMES ACT 2021
New Regulator powers coming into force on 1 October
REGULATOR CODES OF PRACTICE
Interim response to consultation on consolidated code
CHANGES TO PENSION RIGHTS
Court decision on taxation of compensation for changes to pension rights
Follow development and keep under review
Issues affecting DB schemes
Guidance on equalising past transfers
2021/22 PPF LEVY
Facility for levy payers to apply for a payment extension
Issues affecting all schemes
Pension Schemes Act 2021 - implementation
Legislation has been laid before Parliament that will bring the majority of the Pensions Regulator's new powers and sanctions under the Pension Schemes Act 2021 into force from 1 October, including:
- The new criminal offences of avoidance of an employer debt, conduct risking accrued scheme benefits, and failure to comply with a contribution notice.
- The new employer resources and employer insolvency tests for issuing a contribution notice.
- The new civil penalty of up to £1 million for:
- Avoidance of an employer debt.
- Conduct risking accrued scheme benefits.
- Failure to comply with a contribution notice.
- Failure to comply with the notifiable events regime.
- Knowingly or recklessly providing the Regulator (or, in certain situations, trustees) with false or misleading information.
- The Regulator's new information-gathering powers and the new fixed and escalating penalties for failure to comply with its information-gathering powers.
The main change to the Regulator's powers that is not being brought into force yet is the requirement for employers with a DB scheme that are undertaking certain corporate transactions to provide a "declaration of intent" about the transaction to the Regulator and the trustees.
The legislation also ensures that the Regulator's new powers do not have retrospective effect.
No action required, but employers should bear the new powers and sanctions in mind when making decisions affecting a DB pension scheme. Employers and trustees should also be aware of the new sanctions for failure to comply with statutory duties such as the notifiable events regime and the Regulator's informationgathering powers.
Pensions Regulator codes of practice - consolidation
The Pensions Regulator has published an interim response to its consultation on its draft consolidated code of practice. The response's key points are as follows:
- The Regulator will not proceed with the expectation for schemes to limit their investment in unregulated assets to 20% in the way it was drafted in the draft code. However, the Regulator still wants to achieve its original policy objective of protecting members of poorly run, and typically small, schemes from investment in poor quality and/or inappropriate assets. The Regulator will therefore explore options for doing so whilst allowing schemes with liquidity risk management plans and prudent investment strategies to maintain exposure to unregulated assets.
- The Regulator still believes that trustees should prepare their first own risk assessment (ORA) in a timely fashion, i.e. taking the three year legislative timescale as a maximum but preparing the ORA in a shorter timescale as a matter of best practice. The Regulator will consider how often governing bodies should review the ORA and will continue to consider other possible changes or guidance requirements, particularly for smaller schemes.
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Originally Published August 2021
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