Legislation update
Finance Bill & Dormant Assets Bill receive Royal Assent
The Finance Bill received Royal Assent on 24 February 2022, becoming the Finance Act 2022. Our Insight covers the pensions-related measures in the Act.
The Dormant Assets Bill received Royal Assent a day later. This Act legislates to include additional assets from the insurance and pensions, investment and wealth management, and securities sectors in the current dormant assets scheme(see our Insight for further information).
Consultation on regulations extending information and reporting deadlines for scheme pays
The DWP issued a consultation on 18 February 2022 on draft regulations which will extend certain information and reporting deadlines in respect of Scheme Pays and the annual allowance tax charge – Scheme Pays is the system under which an individual can give notice to elect that the scheme pays the annual allowance charge in exchange for an actuarial reduction in scheme benefits. The legislation is proposed to take effect from 6 April 2022. The consultation closes on 15 March 2022.
The regulations 'support' Finance Bill 2022 changes to the period within which a member must give notice and by which the scheme administrator must report and pay the annual allowance charge (see our Insights (1) and (2)).
These changes are primarily being introduced in connection with the remedies the Government is proposing to resolve the public service pension schemes' age discrimination implications of the McCloud case. However, they are not restricted to public service schemes and will apply to all registered pension schemes that use 'scheme pays'.
Overseas transfers & the new Transfer Regulations
The DWP has confirmed in a Parliamentary Committee report that it is 'actively engaging' with the pensions industry in relation to a potential issue with the recently introduced Conditions for Transfer Regulations (see our Insight article) and overseas investments.
Concerns have been raised as regards an amber flag being present in the case of overseas investments in the receiving scheme. The DWP has been put on notice of a possible issue with this flag catching too many pension transfers. The DWP has confirmed that it is "not the intention … to capture … circumstances where there is in fact low risk of a scam" and the DWP is looking into whether the current wording is an issue. If necessary, the DWP may amend the Regulations to "avoid the amber flag capturing more pension transfers than is intended, whilst maintaining the policy intent" of protecting against those scams that utilise overseas investments.
CDC schemes update: Royal Mail hopes to set up CDC scheme by the end of 2022, draft regulations progress & confirmation as to multi-employer CDCs
As confirmed in a joint statement between Royal Mail, the Communication Workers Union and Unite the Union, Royal Mail hopes to set up its new collective defined contribution scheme in the 'latter part of this year' following finalisation of the relevant legislation (see our Insight and below) and completion of the application process with the Pensions Regulator which can be submitted as from August 2022 (see our Insight).
The draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 are continuing their progress through Parliament. During the 21 February 2022 debate by the House of Commons delegated legislation committee, the Pensions Minister confirmed that the Government will "move to multi-employer CDCs in the latter part of this year, going into next year, and will move at a sufficient pace that we feel is appropriate." The regulations were further debated by the House of Lords Grand Committee on 23 February 2022.
The Pensions Regulator: illustrative example of how to approach the climate change regulations
The Pensions Regulator has published an illustrative example demonstrating how the trustees of an example scheme (with DB and DC sections) could approach satisfying the requirements of the climate change regulations that came into force as from 1 October 2021 (see our July 2021 Insight).
The example has been produced in response to requests for additional detail from the Regulator during its consultation on its climate-related governance and reporting guidance (see our January 2022 Insight).