The Pensions Brief - May 2018

May 2018 THE PENSIONS BRIEF At a glance... Issues affecting all schemes DATA PROTECTION EU General Data Protection Regulation and Data Protection Act 2018 come into force MONEY LAUNDERING HMRC announcement on how schemes should comply with the HMRC registration obligation under the Money Laundering Regulations 2017 PUBLIC FINANCIAL GUIDANCE Legislation introducing a single public financial guidance body and new pensions guidance obligations for trustees 21ST CENTURY TRUSTEESHIP Guidance on managing risk added to the Pensions Regulator’s web resource PENSIONS OMBUDSMAN DETERMINATION Transfer to a suspected pensions scam vehicle Issues affecting DB schemes SCOTTISH LIMITED PARTNERSHIPS Government consultation on reforms to the regulatory regime for Scottish limited partnerships FINANCIAL SUPPORT DIRECTIONS Tribunal guidance on the scope of the Pensions Regulator’s powers to issue financial support directions Issues affecting DC schemes MASTER TRUST AUTHORISATION AND SUPERVISION Regulations setting out the detail of the authorisation and supervision regime finalised DC INVESTMENT AND CHARGES DISCLOSURE Clarification on the new DC investment and charges disclosure requirements that came into force on 6 April 2018 Action required Follow development and keep under review 2 x The Pensions Brief Issues affecting all schemes Data protection – new legislation in force The EU General Data Protection Regulation (GDPR) came into force on 25 May 2018. On the same date, the majority of the provisions of the Data Protection Act 2018 came into force. The Act: • repeals the Data Protection Act 1998; and • sets new standards for protecting personal data, in accordance with the GDPR. Action If they have not done so already, trustees should review their data protection arrangements as a matter of urgency to ensure that they comply with the new legislative requirements. Money laundering – HMRC announcement HMRC has announced that schemes that are subject to the requirement to register with HMRC under the Money Laundering Regulations 2017 and that are registered with Pension Schemes Online (PSO) do not need to register separately with the Trust Registration Service (TRS). If a scheme is subject to the HMRC registration requirement under the Money Laundering Regulations 2017, and is not registered with PSO, it must still register with the TRS. Schemes are still required to keep the written up-to-date records of the scheme’s beneficial owners that are required separately under the Money Laundering Regulations 2017. Action Schemes which are subject to the registration obligation should confirm whether they are registered with PSO. If they are not, they should ensure that they have registered with the TRS. Public financial guidance – new legislation The Financial Guidance and Claims Act 2018 has received Royal Assent. Among other things, the Act: • Establishes a single public financial guidance body to which the functions of TPAS, Pension Wise and the Money Advice Service will be transferred. • Requires the government to make regulations imposing an obligation on trustees, when a member or survivor wishes to transfer or start receiving flexible benefits, to ensure that the member/survivor is: – referred to appropriate pensions guidance, and – provided with an explanation of the nature and purpose of such guidance. • Gives the government a power to ban pensions cold-calling. Action The majority of the Act’s provisions have not yet been brought into force. However, trustees should keep this position under review as: • Once the single public financial guidance body is established, schemes will need to update their member communications to replace references to TPAS and Pension Wise accordingly. • Once the government makes the required regulations, schemes offering flexible benefits will need to make changes to their retirement and transfer procedures. Issues affecting all schemes mayer brown x 3 Issues affecting all schemes 21st century trusteeship – new guidance The Pensions Regulator has added guidance on managing risk to its 21st century trusteeship web resource. It has also added a round-up of months 4–6 of the 21st century trusteeship initiative which focused on trustee training, skills and experience, and advisers and service providers. Action No action required, but trustees may find the new guidance helpful when assessing their risk management processes. Pensions Ombudsman – transfer to a suspected pensions scam vehicle The Pensions Ombudsman has decided that there was no maladministration where a scheme followed good practice, including correct due diligence procedures, in relation to a pensions transfer, even though the transfer was made to a suspected scam vehicle. The member had a statutory transfer right and the transferring scheme could not therefore have unilaterally prevented the transfer. All it could do was take appropriate steps to bring the risks associated with the transfer to the member’s attention which it had done by sending the member the Pensions Regulator’s Scorpion leaflet and asking him to confirm that he wished to proceed before making the transfer. Mr E (PO-15726) Action No action required, but schemes should ensure that they follow appropriate due diligence procedures when processing transfer requests and that they draw members’ attention to the risks associated with transfers. 4 x The Pensions Brief Issues affecting DB schemes Scottish limited partnerships – proposals for reform The government has published a consultation on proposed reforms to the regulatory regime governing Scottish limited partnerships (SLPs), including introduction of a requirement: • for an SLP’s principal place of business to be (and remain) in Scotland, and for this to be evidenced on a routine basis; or • for an SLP to maintain a service address in Scotland. The consultation closes on 23 July 2018. Action Schemes which use an SLP as part of an asset-backed contribution arrangement should keep the progress of the government’s proposals under review. Financial support directions – Tribunal guidance The Upper Tribunal has held that: • The Pensions Regulator is not precluded from relying on events that took place prior to the coming into force of the Pensions Act 2004 (and outside the statutory two year look-back period for an financial support direction (FSD)) to justify imposition of an FSD. • It is not necessary for the FSD target’s conduct to have been morally hazardous in order for an FSD to be issued i.e. the target’s conduct need not have been intended to avoid liability for funding the relevant pension scheme or to transfer that liability to the Pension Protection Fund. ITV plc and others v Pensions Regulator and another [2018] UKUT 164 (TCC) Action No action required. Issues affecting DB schemes mayer brown x 5 Issues affecting DC schemes Master trusts – regulations finalised The regulations which provide the detail of the authorisation and supervision framework for master trusts that is being introduced under the Pension Schemes Act 2017 have been laid before Parliament for approval. The regulations will come into force on 1 October 2018. Action If they are not doing so already, schemes which fall within the definition of a “master trust scheme” for the purposes of the Pension Schemes Act 2017 should start making arrangements to comply with the authorisation and supervision requirements. New DC investment disclosure requirements – clarification The government has clarified that the requirement for DC trust-based schemes to make certain information on charges and transaction costs and the scheme’s default arrangement(s) contained in the scheme’s annual governance statement for scheme years ending on or after 6 April 2018 “publicly available free of charge on a website” means that the specified information must be made available to the general public as a whole, rather than just to scheme members. As such, the website on which the information is made available must be accessible free of charge and without the use of a user name and/or password. Action Schemes which provide DC benefits (other than schemes whose only DC benefits are additional voluntary contributions) should ensure that they comply with the requirement to make the specified information available on an appropriate website. Issues affecting DC schemes 6 x The Pensions Brief Mayer Brown events and publications Upcoming events If you are interested in attending any of our events, please contact Katherine Carter ([email protected]) or your usual Mayer Brown contact. All events take place at our offices at 201 Bishopsgate, London EC2M 3AF. Trustee Foundation Course 11 September 2018 11 December 2018 Our Foundation Course aims to take trustees through the pensions landscape and the key legal principles relating to DB funding and investment matters, as well as some of the specific issues relating to DC schemes, in a practical and interactive way. Trustee Building Blocks Class 12 June 2018 – trustee discretions and decision-making (FULLY BOOKED) 13 November 2018 – internal controls and risk management Our Building Blocks Classes look in more detail at some of the key areas of pension scheme management. They are designed to be taken by trustees who have already taken our Foundation Course. Mayer Brown media comment • Stuart Pickford was quoted in CityAm and Law360 articles on the Court of Appeal hearing in British Airways plc v Airways Pension Scheme Trustee Limited • Stuart Pickford wrote an article for Professional Pensions on how the courts can help trustees remedy problems in scheme rules The View from Mayer Brown: UK Pensions Law Podcasts Every month Richard Goldstein, a partner in our Pensions Group, places a spotlight on key developments that could affect your scheme in a podcast. Just 10-15 minutes long and available on iTunes, the podcasts provide a quick and easy way to stay on top of current issues in pensions law. Listen to or subscribe to The View from Mayer Brown UK Pensions Law Podcasts via iTunes here: Please note – subscribing above will only work on a device with iTunes installed. Alternatively, if you don’t have iTunes, you can access the podcasts via our website. Mayer Brown events and publications Please speak to your usual contact in the Pensions Group if you have any questions on any of the issues in this Brief. For more information about the Pensions Group, please contact: Ian Wright Co-Head of Pensions, London E: [email protected] T: +44 20 3130 3417 Jay Doraisamy Co-Head of Pensions, London E: [email protected] T: +44 20 3130 3031 Dates to note over the next 12 months mayer brown x 7 Dates to note over the next 12 months Annual allowance deadline for employers to provide schemes with information to calculate pension input amounts incurred by members in pension input periods ending in the 2017/ 18 tax year Annual allowance deadline for member requests for “scheme pays” (2016/17 tax year) Master trust authorisation and supervision framework comes into force Annual allowance deadline for schemes to include details of tax due under “scheme pays” in scheme’s AFT return (2016/17 tax year) Annual allowance deadline for schemes to pay tax due under “scheme pays” (2016/17 tax year) Annual allowance deadline for schemes to provide members with pension savings statements for the 2017/18 tax year 6 July 2018 31 July 2018 1 October 2018 31 December 2018 14 February 2019 6 October 2018 Key: Important dates to note For information PPF levy deadline for submission of full block transfer certificates 29 June 2018 Deadline for master trusts in existence on 1 October 2018 to either apply for authorisation from the Pensions Regulator or wind up Expiry of VAT exemption for pension fund management services provided by insurers 31 March 2019 1 April 2019 • Automatic enrolment – 3% employer contribution and 8% total contribution required for DC schemes • New pooled fund disclosure requirements for DC schemes come into force 6 April 2019 About Mayer Brown Mayer Brown is a global legal services organization advising clients across the Americas, Asia, Europe and the Middle East. Our presence in the world’s leading markets enables us to offer clients access to local market knowledge combined with global reach. We are noted for our commitment to client service and our ability to assist clients with their most complex and demanding legal and business challenges worldwide. We serve many of the world’s largest companies, including a significant proportion of the Fortune 100, FTSE 100, CAC 40, DAX, Hang Seng and Nikkei index companies and more than half of the world’s largest banks. We provide legal services in areas such as banking and finance; corporate and securities; litigation and dispute resolution; antitrust and competition; US Supreme Court and appellate matters; employment and benefits; environmental; financial services regulatory and enforcement; government and global trade; intellectual property; real estate; tax; restructuring, bankruptcy and insolvency; and private clients, trusts and estates. Please visit www.mayerbrown.com for comprehensive contact information for all Mayer Brown offices. Mayer Brown is a global services provider comprising legal practices that are separate entities, including Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated (collectively the “Mayer Brown Practices”), and affiliated non-legal service providers, which provide consultancy services (the “Mayer Brown Consultancies”). The Mayer Brown Practices and Mayer Brown Consultancies are established in various jurisdictions and may be a legal person or a partnership. Details of the individual Mayer Brown Practices and Mayer Brown Consultancies can be found in the Legal Notices section of our website. “Mayer Brown” and the Mayer Brown logo are the trademarks of Mayer Brown. © 2018 Mayer Brown. All rights reserved. Americas | Asia | Europe | Middle East | www.mayerbrown.com XXXX Mayer Brown is a global legal services provider advising many of the world’s largest companies, including a significant portion of Fortune 100, FTSE 100, CAC 40, DAX, Hang Seng and Nikkei index companies and more than half of the world’s largest banks. Our legal services include banking and finance; corporate and securities; litigation and dispute resolution; antitrust and competition; US Supreme Court and appellate matters; employment and benefits; environmental; financial services regulatory and enforcement; government and global trade; intellectual property; real estate; tax; restructuring, bankruptcy and insolvency; and private clients, trusts and estates. Please visit www.mayerbrown.com for comprehensive contact information for all Mayer Brown offices. Mayer Brown is a global services provider comprising legal practices that are separate entities, including Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated (collectively the “Mayer Brown Practices”), and affiliated non-legal service providers, which provide consultancy services (the “Mayer Brown Consultancies”). The Mayer Brown Practices and Mayer Brown Consultancies are established in various jurisdictions and may be a legal person or a partnership. Details of the individual Mayer Brown Practices and Mayer Brown Consultancies can be found in the Legal Notices section of our website. “Mayer Brown” and the Mayer Brown logo are the trademarks of Mayer Brown. “Mayer Brown” and the Mayer Brown logo are the trademarks of Mayer Brown. © 2018 Mayer Brown. All rights reserved. Attorney advertising. Prior results do not guarantee a similar outcome. 0532 pen