Public Service Pensions Update | August 2021
Published on 17th Aug 2021
Welcome to the latest edition of our Public Service Pensions Update
As usual, August is proving to be a quiet month for pensions news. This means that we can keep this edition short!
If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.
Update | McCloud
In our last newsletter, we reported that the Public Service Pensions and Judicial Offices Bill , which includes McCloud remedy provisions, has been introduced to Parliament.
The Home Office has now published guidance on the draft remedy provisions. This is likely to be of interest to all public service pension schemes.
Investment | Illiquid assets
The prime minister and chancellor of the exchequer have called for an "Investment Big Bang, to unlock the hundreds of billions of pounds sitting in UK institutional investors and use it to drive the UK’s recovery" and issued a challenge to pension schemes to invest more in long-term UK assets.
There have also been reports that, for defined benefit schemes, the Pensions Regulator is reconsidering the statement in the "Investment decision-making" module of its draft combined code of practice that, "[u]nless there are exceptional circumstances, governing bodies should ensure no more than a fifth of scheme investments are held in assets not traded on regulated markets". The one fifth limit was linked to regulation 4(5) of the Occupational Pension Schemes (Investment) Regulations 2005, which requires trustees to ensure that scheme assets consist predominantly of investments admitted to trading on regulated markets.
The government has a strategic interest in encouraging funds to invest in illiquid assets. For funds, the focus must always be on their duties to members and the investment and other advice they receive. In its call, the government acknowledges that "[c]hoosing which assets to invest in to secure the best outcomes remains a matter for pension fund trustees ... there is no single ‘right answer’ for the amount that should be invested in these long-term asset classes".
Investment | Climate change risk
The Pensions Regulator has published a blog, suggesting how pension schemes "can and must make a difference in the transition to a net zero economy". Funds might like to read the blog and review the suggested actions.
Other developments | Q4 2021 pensions action plan
We have released our Q4 2021 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.
Pensions Ombudsman | Various
The Pensions Ombudsman has rejected a complaint, by a member of the Teachers' Pension Scheme, that she was not told she could take her pension benefits at age 60 or warned that, if she continued to work, she would lose the payments that would otherwise have been made between her 60th birthday and the date she left employment.
The member had called to check what her normal pension age was, but did not ask about her options, and Teachers' Pensions did not send any options information to her in the run up to her 60th birthday. The Ombudsman found that "there was sufficient information on TP’s website that would have made Mrs R aware of the implications of not claiming her pension and continuing to work past her NPA. Mrs R could have also asked her employer for further information". …"It is important that members check all the information available, read it carefully and if unsure, make specific enquiries with the scheme before making important decisions regarding retirement".
House of Commons Library briefing papers | New and updated
This has been a quieter month for pensions-related House of Commons library briefing papers.
The Department for Work and Pensions has published two information sheets. One explains the effect of the new state pension on guaranteed minimum pensions, and one explains the effect on the new state pension of someone previously having been contracted-out.
This newsletter covers developments relating to public service pensions in England and Wales, with a focus on the Local Government Pension Scheme.