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The Court of Appeal has rejected ITV’s appeal of a 2016 Upper Tribunal ruling in relation to the Box Clever pension scheme, and specifically the Financial Support Direction (FSD) instigated by The Pensions Regulator (TPR) in 2011.
Box Clever was originally set up by what is now ITV plc, as an appliance rental company. It went into administration in 2003, leaving a £62 million deficit in the pension scheme, as measured in 2009. The tribunal case and subsequent appeal centred on whether ITV was ‘connected or associated’ with the scheme and whether TPR, which didn’t exist in its current state when the company collapsed, had the right to retrospectively issue a FSD.
As is usually the case with an FSD, TPR has not instructed ITV precisely how they should go about funding the deficit.
TPR is understood to be targeting March 2020 for the first draft of its revamped code of practice
TPR has issued a statement confirming that it is planning a wholesale revamp of its codes of practice over the course of the next year.
The intention is that TPR will eventually replace all current codes and some guidance documents with a single web-based manual, something like the Financial Conduct Authority (FCA) handbook. Some of the current guidance hasn’t been updated in over 10 years and so the opportunity will also be taken to review content.
TPR is understood to be targeting March 2020 for the first draft, which will include new Environmental, Social and Governance (ESG) requirements. This will also include the migrating of existing codes of practice and content on internal controls, and reporting. However, the new version will not initially contain the planned new Scheme Funding code (see below) – this will remain separate until much later in the process.
TPR has published a number of communications on the subject of scheme funding as it prepares to launch a revamped code of practice in mid-2020.
Before then, a wider-ranging and high-level consultation will consider how the Regulator’s new powers will be announced in the 2018 White Paper, interacting with the development of the Scheme Funding regime. However, these new powers have yet to come into force, as primary legislation is required and a pensions bill has yet (at the time of writing) to be scheduled for parliamentary scrutiny.
Nevertheless, a blog written by David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at TPR, confirms that there will be two consultations in the near future. The first of these, will be launched in the summer, covering:
TPR then goes on to say that the revised code will set out a ‘fast-track route’ for schemes, allowing trustees to demonstrate compliance with the regime without the need for TPR to more closely scrutinise assumptions or recovery plans.
However, the Regulator insists that there is no plan for “MFR 2.0” – for example, there will not be a specified basis for calculating schemes’ funding liabilities and no hard-and-fast rules around bringing funding levels up to full coverage.
Meanwhile, setting a LTO is a key theme of TPR’s 2019 annual funding statement. It is expected that next year’s code of practice will require trustees to be ‘prepared to evidence’ their short-term funding strategies are aligned with their specified LTO.
For further details see our briefing.
The Department for Work and Pensions (DWP), has a published guidance on the use of Guaranteed Minimum Pensions (GMP) conversion legislation.
The guidance suggests a 10-step plan for implementing GMP conversion according to legislation
The guidance sets out a suggested 10-step plan for implementing GMP conversion in accordance with the legislation.
The methodology that the DWP is putting forward, should be considered as one way of achieving GMP equalisation. However, it places no obligation on schemes to use this method and the DWP recognises that other methods may be used.
Meanwhile, HMRC has said in its latest pension schemes newsletter, that progress has been made in relation to the taxation of uplifts arising from GMP equalisation. A working group was established in April to consider whether and how, unanticipated tax charges may be avoided. Further guidance is expected later in the year.
TPR has issued a consultation on the future of trusteeship and governance, having discovered that “evidence that the current system doesn’t work for all is stark”. TPR’s work follows on from their ‘21st Century Trusteeship’ campaign and various related thematic reviews of trusteeship.
Some of the key proposals that TPR is considering include:
TPR has also issued a new version of its guide to investment governance – one of six which support the Regulator’s code of practice no. 13 for trustees of DC schemes. The Pensions and Lifetime Savings Association (PLSA), has a practical ‘made simple’ guide to aid trustees in relation to ESG issues and also recently published a more in-depth guide in response to more recent regulatory requirements.
Now, further regulations which will come into effect from next year will require both DB and DC schemes to expand the content of their Statements of Investment Principles (SIPs) and to disclose additional information online:
We expect that TPR will provide further guidance on the above changes in due course.
The code is intended to be voluntary and ‘sets an industry standard’ for trustees and administrators dealing with member transfer requests from registered pension schemes.
The Pension Scams Industry Group (PSIG) has produced an updated version of its code of good practice.
The code is intended to be voluntary and ‘sets an industry standard’ for trustees and administrators dealing with member transfer requests from registered pension schemes. TPR expects trustees to carry out a reasonable level of due diligence, in relation to transfers, and the PSIG code represents the industry’s view of what good practice is.
In particular, the code sets out the standard information that should be obtained by the transferring scheme before a transfer is made, guidance on minimising delays and information to raise member awareness of pension scams. The guide should help to identify red flags, which may indicate the need for closer scrutiny of a transfer request, and sets out how to report suspicious cases.
The code was first published in 2015 and the latest updates reflect changes in pensions legislation and the wider pensions landscape. Updates reflect the introduction of the cold-calling ban from 9 January 2019, the FCA and TPR’s ScamSmart campaign, formation of the Money and Pensions Service (MAPS) in April 2019, and reporting guidance issued by Action Fraud.
Guy Opperman, the Parliamentary Under-Secretary of State for Work and Pensions, has issued a written statement in both Houses of Parliament. The statement relates to various inequalities in eligibility of survivor (dependants) benefits in DB pension schemes.
The Government has confirmed its acceptance and “respect” for the Supreme Court’s decision in Walker vs Innospec in 2017. In particular, restricting same-sex survivor benefits to those based on members’ accrual since December 2005, when the Civil Partnership Act came into force in the UK, is incompatible with EU law.
Schemes should by now have considered whether amendments are required to their Trust Deed and Rules, and legal advice is likely to be necessary.