Welcome to the latest edition of our Public Sector Pensions Update.
With the prospect of a 'no deal' Brexit less than two weeks away, in this edition we look at preparations for a no deal Brexit. We also discuss two announcements that will be of interest to pension schemes, but which are very much contingent on what happens in relation to Brexit: a forthcoming Pension Schemes Bill, and a planned Budget on 6 November 2019.
We also highlight developments in relation to: governance and record-keeping, overpayments, transfers and changes to the female state pension age.
If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.
Queen's speech | Pension Schemes Bill
On 14 October 2019, Her Majesty delivered the 2019 Queen's Speech, which, as expected, placed a heavy emphasis on Brexit. The Speech also confirmed that the government intends to bring forward a Pension Schemes Bill.
The Pension Schemes Bill would: provide a framework for Collective Defined Contribution schemes; strengthen the Pensions Regulator's powers; introduce changes to private-sector scheme funding legislation; provide a framework to support pensions dashboards; and create a power to make regulations to change the circumstances in which a member has a statutory right to transfer their benefits (to help to tackle pension scams).
Governance | Record keeping
On 2 October 2019, the Pensions Regulator announced that, after reviewing the information about record-keeping provided in scheme returns, it had written to the trustees of 400 schemes (including some public sector schemes) to ask them to conduct a data review within six months and confirm the proportion of members for whom they hold accurate common and scheme-specific data. A total of 1,200 schemes will also be reminded to complete reviews of common and scheme-specific data every year.
Pensions Ombudsman | Overpayments and transfers
The Pensions Ombudsman has recently published two decisions of interest relating to public sector schemes.
The first contains a useful reminder of some of the key principles that apply when considering recovery of overpayments.
The second is a decision that an LGPS fund did not carry out sufficient due diligence before transferring a member's benefits to a private-sector pension scheme. It is worth noting that this transfer took place in 2013. In addition to guidance from the Pensions Regulator, schemes responding to transfer requests now have access to the Pension Scams Industry Group's updated Code of Good Practice for combating pension scams.
Consultation response | Merger of two LGPS funds
The government has published its response to the recent consultation on the merger of the West Midlands Integrated Transport Authority Pension Fund and West Midlands Pension Fund and designation of Wolverhampton City Council as the administering authority for both LGPS funds.
Pensions Ombudsman | Corporate plan
The Pensions Ombudsman has published its corporate plan for 2019-2022. The corporate plan sets out the Pensions Ombudsman's strategic aims and objectives for this three-year period and key deliverables for the year 2019-2020.
State pension | Judicial review of changes to female SPA refused
On 3 October 2019, the High Court refused an application for judicial review of the "mechanisms chosen to implement the government's policy" of increasing the female state pension age from 60 to 65 and beyond (in step with increases to the male state pension age), and of "the failure to inform women of these changes". The application was made by and on behalf of women born in the 1950s, who were significantly affected by the changes. The House of Commons Library has updated its briefing paper 'State pension age increases for women born in the 1950s' to take account of the judgment.
Brexit | Preparing for a 'no deal' Brexit
As 31 October 2019 approaches, it is still not clear whether the UK will leave the EU without a deal on 31 October; whether a deal will be agreed; or whether the 31 October deadline will be extended (and, if so, for how long and for what purpose).
A 'no deal' Brexit has the potential to affect many aspects of the day-to-day operation of pension schemes (as we discuss in our recent Insight on the government's no deal guidance). In view of this, schemes should continue to prepare for the risk of a no deal Brexit and take advice (including legal, actuarial and investment) as needed. The state pension would also be affected, although the government's recent announcement regarding pensioners living in the EU provides some help.
Brexit | Budget
On 14 October 2019, the Chancellor of the Exchequer announced that the next budget will be on 6 November 2019. However, this is likely to change if there is a no deal Brexit on 31 October, or if a general election is called.