Pensions legislation and case law update: the latest developments week ended 24 September 2021
In this week’s insight update we report on the reappointment of Guy Opperman as pensions minister and Thérèse Coffey as the secretary of state for work and pensions, the Pensions Regulator’s DC guidance which has been updated to take account of the new value for member regulations, Royal Mail’s announcement of the launch of the UK’s first CMP scheme in 2022, Uber’s confirmation of the pension arrangements for its drivers following the recent Supreme Court decision that its drivers are ‘workers’, the Taskforce on Pension Scheme Voting Implementation’s report on improved voting and the Society of Pension Professionals’ ESG guide.
Guy Opperman reappointed as pensions and financial inclusion minister
Following the recent Government reshuffle, it has been confirmed that, Guy Opperman, the pensions and financial inclusion minister since 2017, has been reappointed to this role. Thérèse Coffey's reappointment as secretary of state for work and pensions, a role she has been in since 2019, was also confirmed in mid-September.
The Pensions Regulator updates its DC guidance for VFM
On 23 September 2021, the Pensions Regulator confirmed that it had updated its value for members (VFM), Winding up a DC scheme & Managing DC benefits: Communicating and reporting (including the chair's statement quick guide and technical appendix) guidance to refer to the requirement for trustees of DC schemes with less than £100m in total assets to undertake a more detailed VFM assessment for scheme years after 31 December 2021 and the requirement for relevant DC and hybrid schemes to provide net investment return information starting with scheme years ending after 1 October 2021.
This new requirement is being introduced by the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021 which will come into force on 1 October 2021.
The Regulator's update follows the 16 September 2021, joint Regulator and Financial Conduct Authority discussion paper on VFM which we reported on in last week's insight update.
Royal Mail intending to set up the first CMP scheme in 2022
It has been reported that Royal Mail is consulting with relevant unions and has written to relevant employees about establishing an occupational collective money purchase (CMP) scheme in 2022. This follows the July 2021 DWP consultation on the draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2021 (see our Insight Update). This would be the first scheme established in the UK under the CMP scheme framework legislated for under the Pension Schemes Act 2021.
Uber confirms details of pension provision following Supreme Court ruling
There have also been various news reports that Uber has confirmed details of the pension provision it will provide to eligible UK drivers following the February 2021 decision of the Supreme Court that confirmed that drivers who used the Uber app were 'workers' with statutory employment rights (see our Insight Update).
Uber will automatically enrol its drivers into a pension scheme with drivers contributing 5% of earnings above £120 a week, and Uber contributing 3%. Pension contributions will be backdated to 1 May 2017 or, if later, the date that the driver first made a trip.
Taskforce on Pension Scheme Voting Implementation report
On 21 September 2021, the DWP published the report of the Taskforce on Pension Scheme Voting Implementation which looks at how to assist occupational pension schemes vote more and improve voting through the setting of voting policies.
The report notes that the greater focus on stewardship and reporting has placed pressure on the delegation and agent voting system where, in the main, asset managers act as agents. Asset managers, especially those of pooled funds, are not always willing to support their clients' views on voting. It identifies certain issues with the current system including complex pension and investment frameworks, reporting and monitoring difficulties and issues with stakeholder attitudes.
The report also makes recommendations to help drive the service provider behaviour adjustments which are needed to facilitate improved voting.
These recommendations include that:
- schemes do not have to set a voting policy but should have ownership of policies undertaken on their behalf;
- fund managers should have more extensive policy disclosure;
- asset managers should allow pooled fund investors to have an 'expression of wish' setting out how votes should be exercised on their behalf;
- the DWP 'promote' a vote disclosure reporting template; and that
- the Financial Conduct Authority provide guidance on an aggregate data set on which asset managers must report.
The Taskforce was set up by the Minister for Pensions and Financial Inclusion in December 2020 to "address problems in the voting of equity shares by pension schemes".
SPP ESG Guide
The Society of Pension Professionals has published a brief guide on environmental, social and governance matters for small to medium-sized occupational pension schemes. It provides guidance on the legal duties and obligations of trustees and provides a framework to be used to help them meet these duties and obligations.
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