PENSIONS NEWS

Aries monitors every development in new and proposed legislation and official guidance.   Clients are kept up to date via the website, email alerts and tweets.   Aries serves as a one-stop source of intelligence on everything that is going on and coming up.   Aries doesn't miss anything of significance.

Here is a selection from our most recent headlines. You can get the fuller details by sending us an email - just click here to fire one off.

  PENSION SCHEMES BILL RE-PUBLISHED
The Pension Schemes Bill 2019/20 was reintroduced to Parliament on 7 January 2020 and received its First Reading in the House of Lords, a formality signalling the start of the Bill's progress.

On the face of it, the Bill is identical to that introduced in October 2019; however, the latest version has gained two extra pages. The substance remains the same, namely:

  • Providing a framework for the establishment, operation and

regulation of collective money purchase schemes (Collective Defined Contribution (CDC) pensions).

  • Strengthening the Pensions Regulator's (TPR's) powers and the existing sanctions regime: introducing new criminal offences, with the most serious carrying a maximum sentence of seven years' imprisonment and a civil penalty of up to £1 million.

  • Giving TPR additional powers to obtain the right information about a scheme and its sponsoring employer in a timely manner, ensuring that it is able to gain redress for pension schemes and members.
    • Providing a framework to support pensions dashboards, including new powers to compel pension schemes to provide accurate information . . .

    10 Jan 2020  

      STATE PENSION: REVALUATION OF PROTECTED PAYMENTS
    When the new state pension was introduced, any part of a person's entitlement based on their pre-April 2016 contribution record that exceeds the new full rate as at 6 April 2016 (£155.65) became known as a "protected payment".

    The State Pension Revaluation for Transitional Pensions Order 2020 (SI 2020/6) revalues these protected payments to reflect increases in the general level of prices since 6 April 2016.

    The Secretary of State for Work and Pensions has discretion to determine the end of the review period for this purpose and also how the general level of prices is to be measured. She has chosen September 2019 as the end date and the Consumer Prices Index (CPI) as the measure. The result is an 8.2% increase over the period from April 2016 to September 2019.

    Corresponding Orders were made in 2016

    (SI 2016/1141), 2017 (SI 2017/1151), and 2018 (SI 2018/1217); all in late November. The 2019 Order here is arriving a little late, for obvious reasons.

    As protected payments may be shared in a divorce settlement, the State Pension Debits and Credits (Revaluation) Order 2020 (SI 2020/7) re-values new state scheme pension debits and credits to reflect price increases since the . . .

    10 Jan 2020  

      DB LEVERAGE AND LIQUIDITY RESEARCH
    The Pensions Regulator (TPR) has published new research on defined benefit (DB) pension scheme leverage and liquidity. The report - based on data from 137 of the largest 400 schemes between 3 October and 1 November 2019 - aims is to better understand the potential risks and to help inform the Bank of England's Financial Stability Report.

    TPR is encouraged that many schemes are well-diversified and actively monitoring portfolio risk. However, in the pursuit of

    higher yields, some schemes are adopting more risky investment strategies - potentially damaging in the event of adverse economic shocks.

    Recently there has been a significant increase in the number of schemes developing strategies based on matching pension scheme cash flows. Often this means significant reliance on building portfolios of assets with contractual cash flows and/or where there is an expectation of an illiquidity premium. Against

    a background of "a relatively benign investment environment where interest rates are close to historic lows and credit conditions have generally been accommodative", TPR warns of additional risks that may not be adequately rewarded.

    TPR's survey identifies potential concentrations of risk within individual schemes and it will consider how best . . .

    23 Dec 2019  

      MOVE OVER HAMPSHIRE: PPF SPENDING CHRISTMAS WITH BAUER
    As scheduled, the Court of Justice of the EU (CJEU) has delivered its keenly-awaited ruling in the Pensions-Sicherungs-Verein VVaG v Gunther Bauer case (C-168/68).

    It hinges on interpretation of Article 8 of Directive 2008/94/EC which states:

      "Member States shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left

    the employer's undertaking or business at the date of the onset of the employer's insolvency in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors' benefits, under supplementary occupational or inter-occupational pension schemes outside the national statutory social security schemes."

    To the general relief of the industry, the PPF and the Government, the Court held that this does not mean a 100%

    guarantee, as Advocate General Hogan's Opinion had argued. Indeed, the Court noted that in transposing Article 8 "Member States have considerable latitude in determining both the means and level of protection".

    The Court ruled that Article 8 must be interpreted as meaning that a reduction in the amount of occupational old-age pension benefits paid to a former . . .

    20 Dec 2019  

      IGCS EXTENDED
    Following a consultation earlier in the year, the Financial Conduct Authority (FCA) has published a policy statement (PS 19/30) setting out final rules to significantly extend the remit of Independent Governance Committees (IGCs) – including Governance Advisory Arrangements (GAAs). Their role is to exercise independent oversight of workplace personal pension schemes, in particular with regard to whether they provide value for money.

    Up to now, their focus has been confined to the accumulation phase, but now it's being extended to the choices available at retirement.

    There will be a new duty for IGCs to:

    • consider and report on their firm's policies on environmental, social and governance (ESG) issues, member concerns, and stewardship, for the products that IGCs oversee; and

  • oversee the value for money of investment pathway solutions for pension drawdown (pathway solutions).
  • The final rules and guidance will come into force on 6 April 2020. Firms that intend to offer pathway solutions should ensure that they have established an IGC or a GAA by 6 April 2020.

    IGCs and GAAs will need to assess the proposed design of pathway solutions, . . .

    20 Dec 2019  

     
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