Legal News

The Society of Pension Professionals ( SPP), which represents firms that advise on pensions, argued that many employees lack the specialist expertise to choose wisely when it comes to their retirement investments. In November 2023, the Department for Work and Pensions ( DWP) outlined proposals for rules letting staff carry on paying into a single pension pot, rather than being enrolled into a fresh workplace scheme every time they change employer. These changes, dubbed the lifetime provider model or 'pot for life', have split opinion. However, Giannis Waymouth, who chairs the society's defined contribution committee, cautioned that the approach may bring difficulties......

A Next Wealth study, commissioned by Aegon UK, reports that 49% of firms have experienced rising demand for guidance on pension tax allowances. As part of the research, 200 financial advisers were surveyed in November 2023. The so‑called lifetime allowance is due to be scrapped on 6 April 2024, lifting the ceiling on the level of tax‑free pension saving that can be put into retirement pots. Nonetheless, two fresh limits will take effect instead from April. On 18 January 2024, Steven Cameron, pensions director at Aegon UK, warned that the details of the lifetime allowance’s abolition, announced only very recently, would heap pressure on advisers as the tax year end nears. Until April 2024, the lifetime allowance stands at a little over £1m. HM Revenue and Customs says this will be superseded by two new limits, which apply to lump sums and death...

With what it considers measured, targeted updates to the 2018 UKCG Code, the FRC aims to strike a balance: sustaining investor and stakeholder confidence in premium listed companies while keeping administrative and regulatory demands on businesses to the minimum required. Digital guidance linked to the 2024 UKCG Code is due for publication on 29 January 2024. Original news: FRC publishes revised UK Corporate Governance Code, LNB News 22/01/2024 18. The Financial Reporting Council has now issued its revisions to the UK Corporate Governance Code (the Code), intended to bolster transparency and accountability across UK companies and to underpin the UK’s growth and competitiveness... Why is the UKCG Code changing? On 24 May 2023, the FRC opened a consultation setting out 18 proposals to amend the 2018 Code, centred chiefly on building a stronger framework for prudent, effective risk management and internal controls. They also...

At Southwark Crown Court, Alan Barratt was ordered to hand over £9,771, while Susan Dalton must pay £25,010, as part of TPR’s drive to return funds to savers duped into surrendering their pensions. In 2022, Barratt, 64, received a custodial sentence of five years and seven months; Dalton, 68, was jailed for four years and eight months. The pair were found guilty of exploiting their roles as trustees to persuade 245 members of workplace pension schemes to transfer their pots into 11 retirement vehicles under their control between 2012 and 2014. According to TPR, the sums demanded reflect the vast majority of Barratt and Dalton’s assets held......

In this issue: Funding Pensions scams and litigation Contracting-out and equalisation Data Protection Daily and weekly news alerts New content Dates for your diary Trackers Funding Govt responds to Committee’s concerns about potential impact on open schemes from new DB funding regime The Work and Pensions Committee has posted on its website a letter from the Pensions Minister, Paul Maynard MP, replying to the Committee’s earlier correspondence of 19 July 2023 to the then Pensions Minister, Laura Trott MBE MP, which raised worries about the possible effects on open defined benefit schemes of the government’s proposed new DB funding framework. In his 18 December 2023 response, the Minister says there is no case for a separate regime for open schemes, which could enable inappropriate gaming, yet these schemes should not be driven into an unsuitable...

What is the background to TPR's consultation on its new General Code? Statutory requirements and consultation process: Under the 2018 Regulations: Trustees and other governing bodies must establish and operate an effective system of governance ( ESOG). For simplicity, this article refers only to trustees. The General Code applies to all occupational pension schemes, with ESOG exemptions for public service schemes, authorised master trusts and authorised collective money purchase schemes. To this end, TPR must issue a Code of Practice covering ESOG and, for schemes with 100 or more members, related areas, including an own-risk assessment of the governance system and a remuneration policy. The General Code has been some time in development. The 2018 Regulations ( SI 2018/1103) took effect in January 2019. TPR issued a draft Code for consultation in March 2021; the consultation closed in May 2021, and an interim...

Redress analysis OAC said its redress analysis sets out the levels of compensation available to people who bring a claim after receiving poor advice when moving their retirement savings. The consultancy noted that someone submitting a complaint after transferring their pension because of unsuitable guidance could now be owed roughly £34,000—up from £22,000 in the last three months of 2023. However, OAC added that this year’s figure shows a ‘noticeable drop’ in redress compared with the start of 2022, when complainants might have received around £165,000. Since early 2022, redress has decreased substantially due to rising annuity rates, said Brian Nimmo at OAC. This indicates that complainants could have increasingly secured a solid guaranteed income from their [defined contribution] pot through the......

What is the background to the call for evidence? Following Chancellor of the Exchequer Jeremy Hunt’s Mansion House address the night before, the DWP launched the call for evidence. Issued in tandem with several other DWP publications, these materials covered a broad spread of topics affecting UK pension schemes. Their shared aim was to boost investment in UK productive finance whilst shielding members’ benefits and giving precedence to a resilient, diversified gilt market. The Chancellor characterised the proposals across the various papers as the ‘ Mansion House reforms’. The DWP placed the Response alongside further papers pertinent to DB pension schemes, including: the Autumn Statement 2023, which confirms that the Government will reduce the authorised surplus payments charge, currently payable on a return of surplus to a scheme employer, from 35% to 25% from 6 April 2024; and Call for evidence outcome: Pension trustee skills,...

What was the background to the call for evidence? In July 2023, the Chancellor’s Mansion House address highlighted concerns that pension schemes—an influential investment sector—were committing very little to unlisted equity. This category includes numerous small and start‑up businesses, which consequently miss out on a potential source of funding. It is clear that pension investment in such unlisted equity is low, and there are several reasons for this: Defined contribution ( DC) arrangements do not share risk across members, making allocations to higher‑risk, higher‑return assets challenging, as the consequences of a risky investment not paying out are greater when they are not spread among savers. Defined benefit schemes do share risk, but many—if not most—in the UK are moving towards buy‑out, which demands de‑risking to make it possible to secure benefits with an insurer achievable......

Original news Mrs S ( CAS-13449- R1C9)—18 October 2023 Summary The PO partly upheld a complaint that a scheme acted incorrectly by seeking repayment of a pension that had continued by mistake following remarriage. The beneficiary could not rely on a change of position defence, as she ought to have received multiple warnings that her pension would end on remarriage, and she should have made enquiries. However, the scheme had not truly exercised its discretion (under regulation 114 of the Teachers’ Pensions Regulations 2010, SI 2010/990) about whether to pursue recovery of the overpayment. The PO’s decision serves as a reminder that where a scheme has a discretion, it must actively consider it rather than relying on a blanket policy. What were the facts? Mrs S was in receipt of a spouse’s pension in respect of her husband, who was a member of the Teachers’ Pension Scheme (the...

Original News Mr S ( CAS-50392- S0T8) and Mr S ( CAS-50391- H3V6)—30 August 2023 Summary The PO dismissed a complaint concerning the pension transfer due diligence undertaken by two arrangements. For the first, the checks were appropriate, and, with no warning signs present, there was no obligation to confirm the scheme’s registration status directly with HMRC. For the second, the provider’s enquiries were insufficient—it omitted to caution about pension scams—yet the PO concluded the transfer would have gone ahead in any event. The decision underscores that expectations for pension transfer due diligence are assessed against the guidance applicable at the time only, in this case. Accordingly, the complaint failed, as determined by the PO. What were the facts? Mr S had pensions that were managed by three insurers: Legal and General ( L& G) Scottish Widows ( SW) Zurich......

Original news Mr Y ( CAS-37372- V4C1)—16 October 2023 Summary The PO dismissed a grievance concerning escalation under an investment policy and the pension’s performance. The contract wording was unambiguous: increases were payable only when the policy value exceeded the applicant’s guaranteed minimum pension ( GMP). Bonuses were wholly at the insurer’s discretion, and the applicant had been issued annual certificates confirming that no bonus had been credited. The PO’s decision reinforces the point that contractual provisions are decisive. Accordingly, the complaint could not succeed... What were the facts? Mr Y held a section 32 buy-out policy with Aviva, which he had funded via a transfer from an occupational pension scheme that included GMPs. The arrangement was intended to deliver pension increases of 8.5%. However, the terms provided that increases would only be paid if the value of the policy was sufficient to cover Mr Y’s GMP......

Original news Mr S ( CAS-39170- Y5Q0)—13 October 2023 Summary The DPO has partly upheld a complaint concerning a section 75 liability arising within a non‑segregated defined benefit scheme governed by Scots law. The complainant, an employer participating in the scheme, had incorporated his sole‑trader plumbing business. He was wrongly assured that incorporation would have no impact; in reality, it triggered a section 75 employer debt under the Pensions Act 1995. Because of the scheme’s complexity, the company was not told the amount of the liability for well over six years. The DPO decided that: no limitation or prescription defence applied; the scheme administrator made a negligent misstatement about the impact of changing the business’s legal status, the complainant reasonably relied on that advice, and suffered financial loss; and the failure to provide timely notice that a section 75 debt had arisen was...

Steven Cameron, pensions director at Aegon UK, said data from the Office for National Statistics ( ONS), released on 11 January 2024, revealing numbers of people aged over 100 in England and Wales, painted a 'fascinating picture' of longevity higher than before. According to the ONS figures released on 11 January 2024, the count of centenarians has more than doubled since 2002, with an estimated 15,120 people in England and Wales in 2022. The estimated population in the two nations aged 90 and above rose by 2.1% compared with 2021, reaching its highest total to date of more than 550,000 individuals, the figures show......

In a letter to the Work and Pensions Committee, released on 10 January 2024, the Pensions Regulator ( TPR) indicated there may need to be an automatic allowance, under the Privacy and Electronic Communications Regulations ( PECR), for communications issued by pension schemes. As things stand, the rules prevent companies from sending marketing emails to prospective customers unless those individuals have agreed to receive them. Firms can, however, email existing customers about additional deals, provided they have been offered an opportunity to opt out; this practice is commonly called a 'soft opt-in'. TPR said pension schemes were worried that today’s privacy regime could stop them from complying with new draft regulations, which will require them to present savers with different options......

Original news Mr S ( CAS-92093- N4D9)—29 August 2023 Summary The PO dismissed a grievance concerning the distribution of a full pension scheme surplus, on winding-up, to the employers. The trustee had followed the rules properly, weighed all relevant and material considerations and did not arrive at an irrational outcome. The PO’s decision underlines that overturning a trustee’s discretionary decision has a very high threshold. Accordingly, the complaint was not upheld by the Ombudsman in full What were the facts? Mr S belonged to the Bristol Water plc segregated section of the Water Companies Pension Scheme (the Scheme). Under the Scheme rules, the trustee had a discretion to use any surplus arising on a winding-up to enhance members’ benefits, with any remainder to be returned to the employers......

In this issue: TPR publishes new general code of practice Investment Pension benefits Daily and weekly news alerts Dates for your diary Trackers TPR publishes new general code of practice The Pensions Regulator ( TPR) has now issued the long-awaited general code of practice, bringing together and updating ten of its existing codes into a single code made up of 51 shorter, topic-based modules. TPR says this new layout will help governing bodies to locate its expectations quickly and to confirm whether they are being met. The ten codes included cover reporting breaches of the law, early leavers, late payment of contributions, trustee knowledge and understanding, MNTs/ MNDs, internal controls, dispute resolution—reasonable periods, DC governance, and public sector governance. The general code was released alongside TPR’s final response to its 2021 consultation on the general code. Following comments made to the...

Pensions Minister Paul Maynard told the WPC hearing that the forthcoming DB funding rules have been adjusted to give DB pension schemes greater freedom in their asset mixes and allocations, and to enable investment in what the government terms productive finance—specifically higher-risk, higher-return holdings such as new technology start-ups. His comments suggest a potential move away from the initial purpose of the framework, devised in 2020 after a number of large firms collapsed leaving sizeable gaps in their pension pots. “ De-risking is plainly a sensible course for schemes nearing maturity,” he said, “but there are different ways to de-risk.” He added: “ Productive finance can also be harnessed to help deliver those returns.” This was reinforced by Fiona Frobisher, deputy director of DB at the hearing......

The new general code of practice First set out in 2021, the code defines TPR’s expectations for the sector and brings in a new obligation for trustees to conduct routine performance reviews, termed ‘own risk assessments’. TPR noted that although many trustees have lifted governance standards, some still risk falling short. ‘ Those that do not meet the code’s expectations should take action to improve their scheme’s governance’, said Louise Davey, TPR interim director of regulatory policy......

In a warning notice dated 8 January 2024, the FCA stated that an unnamed pensions transfer specialist acted recklessly by urging customers to move their defined benefit pension schemes into alternative arrangements during the period 2015 to 2019. The regulator did not identify his firm nor disclose how many clients received his advice. The number of customers affected was also not disclosed. The adviser, who also performed director and compliance oversight duties, failed to collect adequate information about customers’ financial circumstances before providing those recommendations, the watchdog said. He or she also neglected to evaluate clients’ attitudes to investment and transfer risk......