E-S-G…. (not as) easy as 1-2-3

Wind TurbinesIf you are a trustee of an occupational pension scheme, it is time to start preparing for the new ESG requirements, some of which kick-in on 1 October 2019.

What is ESG?

Environmental, social and governance considerations have come to the fore in recent years especially in the context of pension scheme investment. In its recently updated guidance, the Pensions Regulator (TPR) notes that many scheme members will be invested for a long time and will be exposed to longer term financial risks which potentially include risks that “could be financially significant, both over the short and longer term. When setting investment strategies, we expect trustee boards to take account of risks affecting the long-term financial sustainability of the investments.”

Actions trustees need to take Continue Reading

Pensions Administration Standards Association publishes guidance on cybersecurity

We have previously commented on how the cyber threat to every UK pension scheme must now be very firmly at the top of every trustee’s risk register. GDPR has only served to highlight a fundamental challenge to the cybersecurity of schemes, a challenge that seems to evolve and grow by the week.

PASA has just published some important guidance on cybersecurity risk and risk management to help trustees and their schemes manage the risks. That guidance covers five main areas: risk assessment, governance, risk management, controls and incident management.

Risk assessment. To carry out successful risk assessments, the guidance suggests that trustees must agree what they are trying to protect from cyber risks (e.g. member data), identify the threats, look at relevant controls in place and then assess the likely impact of the risk. They can then go on to consider risk management and the controls in place to assist with that. Continue Reading

Helping employers with their Plumbing Scheme debt challenges

Debt illustrations are starting to land on the desks of employers who have historically participated in the Plumbing & Mechanical Services (UK) Industry Pension Scheme (“the Plumbing Scheme”).

Together with Chris Hawley of Barnett Waddingham, we explore the arising issues and what challenges are open to these employers.

Background

The challenges facing the Plumbing Scheme surrounding historic section 75 exit debts have been well publicised. Essentially, due to a lack of information in historic records regarding employment history, the Plumbing Scheme has not been able to calculate and issue debts to employers who have ceased to participate in the Scheme since September 2005.

The Trustee of the Plumbing Scheme has explained that it has spent a lot of time lobbying and communicating with the various regulatory powers about way the section 75 debt is applied. After several years – in 2014, the Trustee started work with its advisers on the process to begin calculating and recovering section 75 exit debts.

More recently, there has been multiple consultations with employers about the method for calculating the debts. The Plumbing Scheme has now started issuing indicative debt amounts, giving employers a period of 6 weeks to challenge the calculation and amounts, as well as opportunities to discuss payment options before a formal debt is issued to the employer. Continue Reading

To Be [Registrable] or Not To Be, That is the Question

Shakespeare Writing with Feather Pen

Government consultation on transposing the fifth EU money laundering directive into UK law is under way. Do pension trustees need to worry about it?  Probably not. Most of the shocks came in 2017, when the fourth money laundering directive was adopted in the UK. At the same time that many pension trustees were implementing a policy of “data minimisation” for GDPR compliance purposes, HMRC asked schemes to start storing additional personal data in relation to beneficial owners. “Beneficial owner” is widely defined under the 2017 money laundering regulations, capturing pension trustees as well as pension scheme beneficiaries. A new registration system was also introduced, which would kick-in in specific circumstances.

So, given that anti-money laundering compliance has already been on trustee agendas, is the fifth money laundering directive all much ado about nothing? Continue Reading

Is LGPS Governance Up To Scratch?

From asset pooling and actuarial valuations to administration and data, local government pension schemes have a lot to think about this year – meaning good governance is more important than ever. In this podcast episode recorded for Pensions Expert, Kirsty Bartlett, partner in our Pensions team, and Ian Colvin, head of LGPS Benefits and Governance at Hymans Robertson, discuss potential conflicts of interest, pressure on fund resources and the importance of focusing on administration.

*Copyright for this podcast is owned by the Financial Times. This podcast was originally published in Pensions Expert on 3 April 2019.

No Deal, No PPF?

Houses of Parliament from the South Bank

Brexit insolvency issues for trustees of pension schemes with overseas sponsors

You might remember that before 2016, in the world before the EU referendum (which did exist!), it was effectively not possible for the insolvency of an overseas sponsor of a UK pension scheme to trigger entry into the PPF unless the overseas sponsor had a branch or office (an “establishment”) in the UK (for legal geeks you might remember this was the issue discussed in the Olympic Airlines case which was heard by the Supreme Court in 2015).

Following the Olympic Airlines case, in 2016 the PPF entry regulations were amended so that trustees can trigger entry into the PPF where an overseas sponsor with no “establishment” in the UK is unlikely to continue as a going concern.

Problem solved? Well, Brexit might yet throw a spanner into the works (and it might not be the last time that sentence is written…). Continue Reading

Strength in numbers – The Pensions Regulator presents challenges for the sole trader trustee model

Tug of War

Are you a professional trustee of an occupational pension scheme? If so, you will soon be expected to apply for accreditation and demonstrate that you meet a new set of standards.

The Professional Trustee Standards Working Group recently published details of a proposed accreditation framework for professional trustees. This follows on from a consultation which concluded in March 2018.

Continue Reading

I’m a small DC scheme… get me out of here

Elephants

Does your DC scheme have less than £10m in assets or fewer than 1,000 members? If so, you may have to consolidate into another arrangement – or explain why you should not. The encouragement of DC consolidation is one of the proposals in the DWP’s consultation “Investment Innovation and Future Consolidation”, which runs until 1 April 2019.

The consultation focuses on two objectives for trust-based DC schemes in the UK: (1) enabling them to choose to include more illiquid investments in their portfolios and (2) improving scheme governance. The proposed method for both is greater concentration of assets through consolidation.

According to the consultation, there are around 3,000 trust-based pure DC schemes, 93% of whose assets are concentrated in only 7% of those schemes (being the largest schemes, i.e. with over 1,000 members). The DWP’s proposals are designed to accelerate consolidation of assets and the following methods are put forward: Continue Reading

Roses are red, Violets are blue, This Declaration of Intent, Is something new

We may be approaching Valentine’s Day, but the new “Declaration of Intent” to be made by employers to their pension trustees is unlikely to be romantic….

A lot can happen in a year. We’ve had two Royal weddings, a Royal baby, Facebook has been under fire for misuse of personal data, Donald Trump and Kim Jong Un held a summit in Singapore, France won the World Cup and the DWP has been busy considering how best to protect defined benefit pension schemes. In March 2018, the DWP issued its White Paper on “Protecting Defined Benefit Pension Schemes”, which was swiftly followed by various consultations. This included a consultation in June 2018 on strengthening the powers of The Pensions Regulator (TPR). The DWP has now issued its outcome of that consultation.  We are pleased to see that many of our own comments which we provided during the consultation appear to have been persuasive.    Continue Reading

UK Pensions gets a Global Edge

Global Edge - Logo

We are delighted to announce that our award winning HR legal portal “Global Edge” now contains a new special feature on UK pensions law. Global Edge gives instant access (via mobile device or desktop) to a vast array of employment law topics and the latest legal developments in 37 countries plus the EU.

If, for example, you want to know what your employment law obligations would be when purchasing a company that operates in Spain, France, Germany, Malaysia, Romania and the UK, Global Edge will generate a report within seconds comparing the legal requirements for each country. Global Edge also contains a horizon scanner, giving details of all forthcoming developments in employment law, along with access to current news, articles and employment blogs. Continue Reading

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