Welcome to the latest edition of our Public Sector Pensions Update.
With a general election scheduled for 12 December 2019, we look at one change which made it onto the statute book before Parliament was prorogued (the introduction of civil partnerships for opposite-sex couples) and two that did not (the Pension Schemes Bill and changes to pensions tax).
We also highlight developments in relation to governance, stewardship and transfers.
If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.
Survivors' benefits | Opposite-sex civil partnerships
In our August 2019 update, we reported that the Government Equalities Office was consulting on the scope and content of legislation to allow opposite-sex couples to enter a civil partnership.
On 5 November 2019, The Civil Partnership (Opposite-sex Couples) Regulations 2019 were made. The Regulations change the law to allow opposite-sex couples to form a civil partnership from 2 December 2019. Schedule 3 makes consequential amendments to primary and secondary legislation, including some of the legislation applying to public service schemes.
For the LGPS, the Local Government Pension Scheme (Amendment) Regulations 2019 have been made. These regulations amend the LGPS (Transitional Provisions, Savings and Amendment) Regulations 2014 to confirm that, under the earlier regulations: i) the survivor's benefit for a male survivor of an opposite-sex civil partnership will be the same as the benefit for a widower in an opposite sex marriage; and ii) the survivor's benefit for the female survivor of an opposite sex civil partnership will be the same as the benefit for a widow in an opposite sex marriage.
Update | Investment: CMA's final order
On 15 October 2019, the LGPS Scheme Advisory Board updated its briefing note on the Competition and Markets Authority's final order in its investigation into competition in the investment consultancy and fiduciary management markets. The update reflects the board's current understanding in relation to remedy one (compulsory competitive tendering for fiduciary management services) and remedy seven (setting strategic objectives for investment consultants).
Governance | Regulatory intervention report
On 25 October 2019, the Pensions Regulator published a regulatory intervention report in relation to its first ever decision to issue an improvement notice to an LGPS scheme manager for internal control failures.
The report highlights a number of governance points, including the need to effectively oversee work done by third-party service providers, and is essential reading for all administering authorities and pension boards.
Funded schemes | Revised UK stewardship code
On 24 October 2019, the Financial Reporting Council launched a revised UK stewardship code. Funded public sector pension schemes should consider the impact upon them of the UK Stewardship code 2020.
Funded schemes | Updated transfer guidance
The Pensions Regulator has updated its DB to DC transfers and conversions guidance. The changes include confirmation, at paragraph 39, of how schemes should check that a financial adviser has the correct permissions after 9 December 2019. This is the date the Financial Conduct Authority will replace its Approved Persons Regime with the Senior Managers and Certification Regime.
Schemes might also be interested in the Pensions Regulator's press release: 22 years of pension savings gone in 24 hours, which contains four steps that members can take to help to protect themselves from pension scams.
NHS pension scheme | Meaning of "in pensionable employment"
The High Court has considered when a locum GP will be "in pensionable employment" (with the result that survivor benefits should be calculated on the active member basis) for the purposes of the National Health Service Pension Scheme Regulations 1995. The decision in Mr Sanderson v NHS Business Services Authority follows an appeal on a point of law from the Pensions Ombudsman.
Brexit | Extension of Article 50 period
The next steps in relation to Brexit will depend on the outcome of the general election. Schemes should consider the range of possible outcomes and update their contingency plans.
The dissolution of Parliament in the period before the general election means that the Pension Schemes Bill mentioned in our October 2019 update has fallen away. The Budget scheduled for 6 November has also been put back.
The Pension Schemes Bill, which included provisions relating to pensions dashboards, is said to have cross-party support. The question now is whether, when and in what form it might be resuscitated.
Schemes will also need to wait and see what happens next in relation to pensions tax, both in the context of the impact of the lifetime and tapered annual allowance on senior clinicians in the NHS (discussed in previous updates) and more generally.
Other developments | Osborne Clarke's Q1 2020 pensions action plan
We have released our Q1 2020 pensions action plan. Each action plan is a summary of changes and proposals in pensions law and regulation over the last quarter, most of which are also relevant to public sector pension schemes.