Pensions Insight: 28 February to 6 March 2023
In this Insight we report on delays to pensions dashboards, the progress of auto-enrolment regulatory changes and implementation of the McCloud remedy, The Pensions Regulator’s (TPR) prosecution for failing to pay over employee contributions and the new Department for Work and Pensions (DWP) Taskforce on Social Factors.
Pensions dashboards: start date to be delayed
Laura Trott MP, Parliamentary Under-Secretary of State for Pensions, has announced that the Pensions Dashboards Programme (PDP) is to be ‘reset’ with amended start dates and with a new chair of the PDP board. This is because more time is needed to set up the dashboards architecture that will allow schemes and pension providers to connect by their respective deadlines. The statement confirms that the regulatory framework ‘remains fit for purpose’ but that the timings (which currently sit within schedule 2 to the Pensions Dashboards Regulations) will be amended as soon as possible. The Government will give another update before the summer parliamentary recess that begins on 20 July 2023.
The delay is not wholly unexpected given the scale of what the set-up entails – however, to come so close to the finish line is disappointing. For now, schemes do not need to take any specific action, but they should keep a look out for the amended timescales – we will update our readers in due course. See our Insight for details of the regulations.
Automatic Enrolment Bill starts its journey in House of Commons
The Pensions (Extension of Automatic Enrolment) (No. 2) Bill had its first reading in the House of Commons on 27 February 2023 and commenced its second reading on 3 March 2023. This Private Members’ Bill includes similar provisions to the one that was introduced as a Private Members’ Bill back in January 2022 but which was subsequently withdrawn (see our Insight). It has received Government support.
The explanatory notes explain that the Bill will allow automatic enrolment to be expanded through a regulatory power which will permit the age at which eligible workers must be automatically enrolled to be reduced from 22 to 18 and for the Lower Earnings Limit of the qualifying earnings band (currently £6,240) to be reduced or repealed. Both changes were recommended by the 2017 independent review of auto-enrolment and are anticipated to cost around £2bn in 2022 earnings terms for the first year of implementation.
McCloud remedy: Police, firefighter and civil service regulations for ‘retrospective remedy’
The Home Office has published three sets of regulations to provide for the second phase of the McCloud remedy – one set relating to the Firefighters’ Pension Scheme, a second set to the Police Pension Scheme and the third to the Civil Service Pension Scheme. All are due to come into effect from 1 October 2023.
These follow the November 2021 Home Office consultations on draft regulations (see our Insight) which enacted the first ‘prospective’ phase of the remedy by making relevant public sector workers members of a 2015 reformed pension scheme on and from 1 April 2022. The second ‘retrospective’ phase remedies the discrimination that took place between 1 April 2015 and 31 March 2022 by allowing members a ‘deferred choice underpin’ of taking either legacy or reformed scheme benefits for service between 2015 and 2022 when their benefits become payable.
TPR prosecution for alleged failure to pay over employee contributions
The Pensions Regulator is going to prosecute Lee Bartholomew, company director of a shooting sports centre, for allegedly fraudulently evading his duty under section 49(8) of the Pensions Act 1995 to pay employee pension contributions.
Under section 95(11) of the Pensions Act 1995, it is a criminal offence for an employer to deduct money from an employee’s salary as contributions and not pay it to the trustees within a specific period. Mr Bartholomew will appear before Brighton Magistrates Court on 24 March 2023.
DWP announces new Taskforce on Social Factors to support pensions industry
It has been reported in the pensions press that on 28 February 2023, the DWP launched a new Taskforce on Social Factors. The Taskforce will operate for a year and help support the pensions industry in addressing social factor challenges including identifying reliable data and metrics providing resources to help assess and manage financially material social risks and opportunities. It will provide guidance and recommendations and help further progression of social factor principles, international standards, and metrics.
The taskforce follows the Government’s July 2022 response to a March 2021 call for evidence asking for views on how schemes approach social risks and opportunities (see our Insight).
Taskforce members include representatives from pension schemes, asset managers, data providers, various government departments, the Financial Conduct Authority, the Pensions Regulator and cross-industry collaboration groups.
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