In addition to Covid-19-related developments, we look at the latest position with the pensions dashboard and investment costs transparency. We also discuss two private sector pensions changes of which public service pension schemes should be aware.
If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.
Covid-19 | Pensions development tracker
Our regular pensions development tracker lists Covid-19-related legislative and regulatory developments that are likely to be of interest to the administering and employing authorities of public service pension schemes. Since the last newsletter we have published our fifth, sixth and seventh trackers. These include details of important changes to Pensions Regulator and HMRC guidance. They also highlight changes to the Coronavirus Job Retention Scheme (CJRS) and the extension to 1 November 2020 of the protected pension age easement for key workers returning to work in response to the Covid-19 pandemic.
In addition, the following developments will be of particular interest to public service pension schemes:
- The Local Government Association continues to update its Covid-19 news and information web page. Since 26 May, it has made important updates to its FAQs for Local Government Pension Scheme (LGPS) employers and administrators, added materials from its recent webinars for LGPS employers, flagged the Pensions Regulator's guidance on communicating with members (including the transfer warning letter that should be issued to members), and highlighted further information relating to the CJRS;
- The LGPS Scheme Advisory Board continues to update its dedicated Covid-19 page. Recent additions include the results of the recent survey about the impact of Covid-19 on LGPS governance; and
- The Ministry of Housing, Communities and Local Government continues to update its dedicated Covid-19 guidance for local government.
Governance | Corporate Insolvency and Governance Bill
The Corporate Insolvency and Governance Bill will soon receive Royal Assent. The Bill contains provisions which could be significant, for example, for public service pension schemes that have private sector employers or other employers constituted as companies. We will include more information in the next newsletter.
Administration | Pensions dashboard
The Money and Pensions Service (MaPS) has announced the next steps in the pensions dashboard project. It has started a period of informal market engagement with potential suppliers of the digital architecture to connect people with their pensions information. Suppliers are being invited to register their interest by 31 July 2020, with a view to a formal procurement process starting this autumn.
On 6 July, the MaPS will open an industry-wide call for input on data scope and data definitions working papers published in April 2020. Work will also begin on a set of data standards, to be finalised later this year. As this work relates to the data to be made available to the dashboard, funds might like to follow developments and consider submitting a response.
Investment | Costs transparency initiative
The Pension Protection Fund | Compensation cap is discriminatory
The High Court has handed down its judgment in Hughes and others v The Board of the Pension Protection Fund. The Pension Protection Fund (PPF) pays compensation to the members of trust-based defined benefit occupational pension schemes whose employers have become insolvent.
While the High Court confirmed that the method the PPF is using to make sure that each member has PPF compensation in line with an earlier Court of Justice of the European Union decision is permissible, it also ruled that the cap on PPF compensation (the "compensation cap") amounts to unlawful age discrimination.
Members who are under their pension scheme’s normal pension age on the date the scheme enters a PPF assessment period are only entitled to PPF compensation of 90% of a capped amount. This capped amount, the compensation cap, is £41,461.07 for 2020-21.
It is not clear whether the judgment, which we consider in our Insight, will be appealed.
The Pensions Regulator | New guidance for DB superfunds
The Pensions Regulator has issued guidance which will allow defined benefit (DB) superfunds to apply for initial approval and start to transact, pending formal legislation. DB superfunds are trust-based pension schemes set up on a commercial basis to accept bulk transfers from other DB pension schemes. The basic idea is that, when the transfer is made, the employer covenant is replaced by a capital buffer.
This development is important because it will provide a different "endgame" option for private sector DB schemes: an alternative to securing (buying out) benefits with an insurance company.
We discuss superfunds and the new guidance in our Insight.
Pensions Ombudsman | Ill health and incorrect information
The Pensions Ombudsman considered but not upheld a complaint by a member (Mr N) of the Local Government Pension Scheme (LGPS) who argued that his "active member" ill health retirement pension should be backdated to the date his application was first decided (which was before his employment was terminated). He has partly upheld a complaint by an LGPS member (Mrs S) who was provided with incorrect information about her right to transfer, which she could not fully verify on the scheme's website. And he upheld an application by an LGPS member (Mr S) who was incorrectly told that he could use his transferred-in Additional Voluntary Contributions to purchase additional pension when he retired.
He has also partly upheld a complaint by a member (Dr I) of the NHS Pension Scheme who was told he could purchase six years 29 days of added years but was only allowed to purchase one year 262 days.
Brexit | Continuing negotiations
The 30 June deadline for any extension of the transition period has passed without an extension being agreed. As talks between the UK and EU continue, funds should revisit their contingency plans for when the transition period comes to an end on 31 December 2020. Funds might also like to read our Brexit Insights.
House of Commons Library briefing papers | New and updated
The House of Commons library has published or updated the following briefing papers which might be of interest to public service pension schemes and employers: