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Welcome to your weekly update from the A&O Shearman Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
Summary
TPR urges trustees of smaller defined contribution schemes to assess viability under new Pension Schemes Bill duties and consider consolidation or winding-up for member benefit.
“Steps to stay scam safe” leaflet updated to include FCA Firm Checker tool.
TPR updates breach reporting guidance to include two new dashboard-related “green breach” examples for trustees overseeing dashboards compliance.
TPR: Action needed on DC consolidation
The Pensions Regulator (TPR) is encouraging trustees of smaller defined contribution (DC) schemes to consider whether continuing to run their scheme is realistic in light of the significant new legal duties being introduced by the Pension Schemes Bill, or whether members would benefit from consolidation or wind up.
In particular, TPR’s latest blog post points to forthcoming new requirements on providing default decumulation pathways (guided retirement solutions), assessing the value for money provided by default arrangements, and enabling the consolidation of deferred small pots. Each of these reforms will increase governance and operational demands, and TPR suggests that smaller schemes may not have the capacity to meet those demands.
TPR has published guidance on consolidation, setting out the considerations and preparation required to assess whether to transfer to a master trust (and how to approach and assess different master trusts), and has updated its winding-up guidance. It suggests that schemes should begin preparing now rather than waiting until the requirements take effect. For the purposes of the guidance, schemes with fewer than 5,000 members are defined as “smaller DC schemes” but TPR suggests that the guidance may also be useful for DC schemes with 5,000+ members.
Read the consolidation guidance, updated winding-up guidance and related blog post.
Dashboards: TPR updates on breach reporting
TPR has updated its guidance on reporting breaches of the law to include two dashboard-related examples of “green breaches”.
The Pensions Dashboards Regulations require that schemes provide value data (accrued pension data and projected value data) within specific timescales following a request. Where the data has been generated from a statement provided to a member within the past 13 months, or is based on a calculation made within the past 12 months, it must be provided immediately. Otherwise, it must be provided within three working days (for DC benefits) or ten working days. Where these conditions are not met, trustees should consider whether to report a breach of the regulations to TPR.
The new breach reporting examples concern instances where, for a short period each year while updated values are uploaded, value data may be slightly out of date (i.e., the calculation is not made within the past 12 months), and where a breach occurs during the launch/testing phase.
The material significance of any breach will be fact-specific, taking into account factors such as the length of any delay, whether it is a systemic issue, the risk of harm to savers, and whether the scheme’s governing body is taking action to address the root cause, where appropriate.
Read the updated breach reporting guidance.
Update to “Steps to stay scam safe” leaflet
The Pension Scams ActionGroup “Steps to stay scam safe” leaflet has been updated to include a new Financial Conduct Authority (FCA) Firm Checker tool. The tool allows savers to check for themselves whether firms are FCA authorised and have permission to sell products and services. TPR recommends that schemes include the leaflet with members’ annual pension statements, and provide it to any member who requests a pension transfer.
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