The trustee agenda: Spring 2022 update
We take a look at the key topics for trustees' Spring 2022 agendas and business plans.
31 March 2022 deadlines
31 March 2022 is the deadline for submission of scheme returns to the Pensions Regulator (the Regulator). Additional questions have been added to this year's return – see this edition of Insight which was prepared by our pension lawyers at Gateley Legal.
Contingent asset certificates
31 March 2022 is also the deadline for sending contingent asset certificates, asset backed contribution certificates and special category applications to the Pension Protection Fund (the PPF)
1 April 2022
Contingent asset documents
Contingent asset documents including guarantor strength reports must be emailed to the PPF by 5pm on 1 April 2022.
Fraud compensation levy increase
The fraud compensation levy is being increased as from 1 April 2022 from 75p to £1.80 per member (with the levy for master trusts going up from 30p to 65p per member). Gateley's Insight has further details.
6 April 2022
Two additional employer-related notifiable events were expected to come into force on 6 April 2022. These are a decision in principle to either:
- sell a material proportion of the employer's business or assets; or
- grant or extend a 'relevant security' that ranks ahead of the pension scheme.
This means that certain corporate activity will need to involve the trustees and the Regulator earlier than is required at present.
The draft regulations bringing in these changes were consulted upon by the DWP back in September 2021. However, as at the date of drafting, there has been no response from the DWP in relation to the consultation (apart from a minor change to the regulations' wording in October 2021) and the final regulations have not yet been laid before Parliament. Exactly when the changes will be brought in and in what form is still uncertain and trustees will need to remain on the lookout for the position to be confirmed by the Government.
For further details of these additions and other notifiable events changes please see Gateley's Insight.
Increase to NMPA
Normal minimum pension age is being increased from age 55 to 57 on and from 6 April 2028 (subject to a protection regime). The legislation introducing this change comes into effect on 6 April 2022. See Gateley's Insights (1) and (2) for further details.
Trustees need to understand what their scheme rules provide on normal minimum pension age (legal advice may be required) and arrange for members to be communicated with as necessary so that expectations can be managed, and appropriate financial planning can be undertaken.
DC flat fee charges
The £100 de minimis level on DC default flat fee charges is being implemented on 6 April 2022 – Gateley's Insight has further details.
5pm, 29 April 2022
Deficit-reduction certificates and exempt transfer applications
Deficit-reduction certificates must be sent to the Regulator and exempt transfer applications must be sent to the PPF by 5pm on 29 April 2022.
(Full block transfers must be certified with the Regulator by 5pm, 30 June 2022.)
1 June 2022
Stronger nudge requirements
As from 1 June 2022, trustees must ensure that beneficiaries who wish to take or transfer flexible benefits (broadly defined contribution or cash balance benefits) are given a 'stronger nudge' to pensions guidance by ensuring that they have received or opted out of receiving such guidance. Gateley's Insights (1) and (2) have more information.
Trustees will need to liaise with the scheme's administrators to ensure that relevant retirement and transfer processes, procedures and communications are updated to comply with the new requirements. This will include building in enough time to allow beneficiaries to obtain and consider the guidance.
tPR's single code of practice
The Regulator's new single code of practice is expected to be laid before Parliament this Spring and be brought into force during the Summer at the earliest.
Trustees will need to check that their schemes have an effective system of governance. Trustees of schemes with 100 or more members will also need to carry out and document an “own risk assessment”. See here for our article on preparing for the new code.
Defined benefit scheme funding
Trustees will also need to look out for the DWP's draft defined benefit scheme funding regulations which are expected this Spring. It is anticipated that shortly following this, the Regulator will issue the second consultation on its new DB funding code of practice in late Summer 2022.
Trustees should discuss preparatory steps for their scheme's pension dashboards staging date with the scheme's administrators; the 'indicative' draft Pensions Dashboards Regulations 2022 set out what trustees will need to do to meet the requirements.
UK-registrable occupational pension schemes (stakeholder schemes excluded) with 100 or more active and deferred members (thereby excluding pensioners and survivors) are within scope. Schedule 2 of the draft regulations sets out a proposed staging timetable with larger schemes being required to connect first.
GMP conversion bill
The Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill is expected to receive Royal Assent before the Queen's Speech, usually held in May. It received its second reading in the House of Lords on 25 March 2022. The Bill is intended to help facilitate GMP conversion which many schemes are currently considering using to equalise GMPs.