This week’s insight includes details of the Pensions Regulator’s revised Code of Practice 12, covering the new contribution notice powers that came into force on 1 October 2021, a recent blog by the Regulator on auto-enrolment and the latest statutory revaluation order.
Contribution notices code of practice comes into force
The Pensions Regulator's revised Code of Practice 12: Contribution Notices came into force on 25 November 2021 under a statutory instrument which was laid before Parliament two days earlier. Access the code-related guidance.
The code outlines the circumstances in which the Regulator would envisage issuing a contribution notice where it considers the material detriment test or the new employer insolvency or employer resources tests have been met.
You can find relevant background detail on the initial consultation on the draft code and guidance in our May insight update. Although the Regulator updated the examples in the guidance, the final version of the code was not changed significantly. Nevertheless, the Regulator did confirm that it would consider providing separate guidance on the use of its contribution notice powers in the future. Quite when or whether this will be produced is not yet known.
High Court approves transfer of annuities from Prudential to Rothesay Life
The High Court has approved the insurance business transfer of around 350,000 annuities worth £12bn from Prudential Assurance Company Ltd to Rothesay Life plc. This follows the December 2020 Court of Appeal decision which overturned the earlier refusal of the High Court to approve the transfer. We reported on the Court of Appeal decision in our July insight update.
The decision on the transfer had been remitted back to the High Court for a second sanction hearing which was held between 8-10 November. All annuities affected will transfer to Rothesay with effect from 15 December 2021.
There were hearings in the Royal Courts of Jersey and Guernsey on 26 and 29 November 2021 respectively at which the courts have considered whether to approve the equivalent insurance business transfer schemes in Jersey and Guernsey.
TPO factsheet on 'workplace pensions – unpaid pension contributions'
On 24 November 2021, the Pensions Ombudsman, together with MoneyHelper and The Pensions Regulator, published a factsheet on workplace pensions and unpaid pension contributions, the aim being to provide members with a better understanding of what action to take if their employer does not pay contributions into their personal or occupational pension scheme.
It explains that the first point of contact should be the employer after which, if the matter is not resolved, help can be obtained from MoneyHelper to understand the pension arrangement, the Regulator in respect of compliance and the Ombudsman for complaint resolution.
The Pensions Regulator blog on auto-enrolment and re-enrolment
The Pensions Regulator published a blog on 24 November 2021 detailing the success of auto-enrolment with more than 10 million people saving through auto-enrolment but noting that there is still work to be done in certain areas, for example, women are saving less than men and fewer people in certain ethnic minority groups are contributing.
The blog confirms Regulator support for reducing the age at which people can join a scheme. There is also a call for action for gig economy employers to ensure compliance with their duties and, finally, a reminder that employers must comply with re-enrolment duties.
PLSA guide on Integrated Risk Management
The PLSA has published an updated Made Simple Guide on Integrated Risk Management (IRM). It covers some basics about IRM, the benefits and challenges of IRM, how it works in practice, tools that can be used to apply IRM, training and education and concludes with a case study.
McCloud: Civil Service Pension Scheme consultation
On 22 November 2021, the Cabinet Office published a consultation containing draft regulations. The regulations introduce changes to the civil service pension schemes required to remove the unlawful discrimination identified in the 2018 McCloud case.
This consultation closely follows the recent Home Office consultation on amendments to the police and firefighters' pension schemes, which will 'enact the first phase' of the McCloud remedy as reported on in last week's insight update.
The civil service changes are required to move active members of the legacy scheme into the reformed scheme, referred to as 'alpha', from 1 April 2022.
The latest consultation also covers member contributions payable from 1 April 2022 to 31 March 2023. It is intended that the 2021/22 rates will be rolled over subject to review when the results of the 'cost control' element of the 2016 valuation process, which was temporarily put on hold because of uncertainty following the McCloud and Sargeant rulings, are available. (See our insight update for an explanation of the 'cost control' mechanism.)
Revaluation order laid before Parliament
The latest statutory revaluation order has been laid before Parliament and will come into force on 1 January 2022, based on the increase in the consumer prices index for the 12 months to 30 September. The higher revaluation figure (for service accrued before 6 April 2009) has been capped at 3.1% and the lower revaluation figure (for post 5 April 2009 service) has been capped at 2.5% for 2021, where schemes use the final salary method of revaluing deferred pensions.