This week’s digest covers the court hearing on the Prudential and Rothesay insurance business transfer, the draft Bill which will remedy the McCloud age discrimination findings for public service pension schemes and an update on eligibility for the Fraud Compensation Fund for victims of pension scams. We also provide an update on pensions dashboards.
Prudential and Rothesay insurance business transfer – further hearing date set
The High Court hearing, which will consider approval of the insurance business transfer from Prudential Assurance Company Ltd to Rothesay Life plc, is to take place on 8 November 2021.
This follows the December 2020 Court of Appeal decision which overturned the earlier refusal of the High Court to approve the transfer. The Court of Appeal concluded that there were mistakes in the way the High Court had approached the exercise of its discretion on insurance business transfers, and it clarified the process under Part 7 of the Financial Services and Markets Act 2000 which governs the transfer of insurance and reinsurance portfolios and related assets and liabilities in the UK. The transfer was remitted back to the High Court for a second sanction hearing.
The transfer is expected to take place on 15 December 2021, subject to the High Court's approval. At present there are around 350,000 annuities which would be transferred under the proposal.
There will also be hearings in the Royal Courts of Jersey and Guernsey on 26 and 29 November 2021 respectively at which the courts will consider whether to approve the equivalent insurance business transfer schemes in Jersey and Guernsey.
Public Service Pensions and Judicial Offices Bill
The Public Service Pensions and Judicial Offices Bill received its first reading in the House of Lords on 19 July 2021. The second reading is set to take place on 7 September 2021.
This Bill introduces provisions to remedy the age discrimination identified in the McCloud case (The Lord Chancellor and Secretary of State and another v McCloud and Mostyn and others and Sargeant v London Fire and Emergency Planning Authority and others [2018]) by allowing members a 'deferred choice underpin' of taking benefits in either the legacy or reformed schemes when their benefits become payable. The Bill also reforms the pension arrangements and increases the mandatory retirement age of judicial office holders to 75 from 70.
WPC publishes correspondence regarding the FCF and schemes without trustees and assets
The Work and Pensions Committee has published correspondence between itself and the Pensions Regulator and the Pension Protection Fund regarding those schemes to which there is no appointed independent trustee and no identifiable assets and the effect this may have on eligibility for compensation from the Fraud Compensation Fund (the FCF) which is managed by the PPF.
This follows the finding of the High Court in the November 2020 Board of the PPF v Dalriada case that pension liberation or scam cases are eligible for the FCF (subject to certain conditions). Most of these cases have had a trustee appointed by the Regulator or the courts but there are a small number that do not.
The joint Pensions Regulator and PPF correspondence confirms that trust-based occupational pension schemes with no assets and with no trustee can, in principle, make a claim to the FCF. However, the legislation framework is such that a trustee is needed to progress applications and process compensation. Trustees also play an important part in determining and understanding the relevant issues and losses.
The Regulator is aware of only a small number of schemes without Regulator or court appointed trustees – it is assessing those schemes to decide whether a Regulator appointment should be made.
Pensions dashboards: PDP recruits seven major providers for initial dashboard testing phase & PASA intend to develop industry data-matching conventions
PDP recruitment: On 28 July 2021, the Pensions Dashboards Programme confirmed that seven major pensions organisations have signed up for the initial Alpha test phase of pensions dashboards. The participating providers are Aquila Heywood, Aviva, Capita, ITM, Legal and General, Mercer and Phoenix Group. They represent a potential combined provider coverage of 30 million pensions.
The PDP will increase the number of volunteer data providers that it works with from Summer 2022 (those interested should contact the PDP). Compulsory onboarding to the dashboards is intended to start in 2023.
PASA news: One day later, the Pensions Administration Standards Association announced that it is to develop industry-wide conventions for matching dashboard users to their pensions. It will do so in conjunction with industry, regulatory and technology organisations including the Pensions and Lifetime Saving Association, the Association of British Insurers, the Pensions Regulator and the Financial Conduct Authority. The intention is to have the initial conventions ready for the Alpha phase so that the seven PDP recruited data providers can start testing in early 2022.