Welcome to our monthly update on current legal issues for trustees of DC pension schemes, designed to help you stay up-to-date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda.

Updated Chair’s statement guidance NEW!

The Pensions Regulator (TPR) has updated its guidance on the chair’s statement to reflect the new disclosure requirements on costs and charges information which came into force on 6 April 2018 and apply to statements for the first scheme year ending on or after 6 April 2018. TPR has also increased its non-statutory expectations of the contents of the statement in several areas, including costs and charges, the monitoring and processing of core financial transactions and trustee knowledge and understanding. Read more

ACTION: Review the updated guidance when preparing the contents of the Chair’s statement.

New voluntary code on transfers NEW!

A new code of practice on transfers has been published by the Transfers and Re-registration Industry Group (TRIG), focusing on timelines and completion of transfers. The timing expectation for a standard transfer between occupational pension schemes involving cash assets is two weeks. The code is intended to reflect current good practice and adherence is voluntary but TRIG expects the Financial Conduct Authority (FCA) and TPR to use it as a benchmark. Read more

ACTION: Review the code and test the scheme’s and administrator’s practices against it.

PASA checklist NEW!

The Pension Administration Standards Association (PASA) has published a checklist to help trustees, whose scheme administrator is not PASA accredited, evidence and action appropriate levels of governance over their scheme’s administrator. Read more

ACTION: If the scheme’s administrator is not PASA accredited, review the checklist against the scheme’s practices to assess if there are any areas requiring attention.

Updated Code on combating pension scams

The industry Code on combating pension scams has been updated. The Code sets out detailed checks to help trustees vet a proposed receiving scheme and is a voluntary standard of good practice.

The updated Code highlights new scamming tactics such as ‘factory-gating’ (approaching members outside their place of work); expands the list of checks to be made, for example identifying factors that could indicate a vulnerable member; and includes examples of member communications, checklists and case studies. Read more

ACTION: Review the updated Code and update your communications and procedures relating to transfers, as appropriate.

TPR governance expectations

TPR’s latest instalment in its ‘21st Century Trusteeship’ campaign looks at ‘managing risk’. The guidance on managing risk includes ‘lack of planning for a cyber incident’ among its case study examples. Read more

ACTION: Review the guidance and consider whether your scheme meets TPR’s expectations.

TPR and registrable information

TPR recently fined a set of trustees for failing to update the register in relation to the appointment of a trustee (in this case, a professional trustee). This was a breach of section 62 of the Pensions Act 2004, which requires trustees to notify TPR, as soon as reasonably practicable, about changes in ‘registrable information’. This fine, the first of its kind, highlights the Regulator’s stance where scheme information is not up-to-date on Exchange. Read more

ACTION: Review whether there are adequate procedures in place to alert you when a change requires notification to TPR.

Master trust regime: are you in scope?

A new authorisation and supervision regime for master trusts is due to come into effect on 1 October 2018. Any scheme that falls within the definition will be unable to operate from 2 April 2019 without authorisation.

Schemes that include non-connected participating employers (broadly, employers that are not part of the same group undertaking) may fall within scope of the master trust definition unless an exception applies – for example, where the participation is a transitional arrangement following a corporate transaction, or relates to a joint venture structure. Schemes where the only DC benefits provided are AVCs, pension credit rights or transfers-in are not affected. Read more

ACTION: If your scheme includes non-connected participating employers, check as soon as possible whether you fall within scope of the master trust regime; contact us urgently if so. 

Watch this space

– Forthcoming standards for professional trustees could particularly affect trustees who fall within TPR’s professional trustee description without being part of a wider organisation. Read more

– The government is proposing a number of changes to help combat pension scams, including changes to statutory transfer rights. Provisions to require members to receive (or opt-out of receiving) guidance in relation to a transfer or flexible access request are included in the Financial Guidance and Claims Act. Read more

Have your say

– HM treasury has published a technical consultation seeking views on the draft regulations banning pensions cold-calling. The draft regulations adopt an ‘opt-in model’ for unsolicited direct marketing calls relating to pensions (deadline 17 August 2018). Read more

– The Competition and Markets Authority (CMA) has published its provisional decision report on its investigation of investment consultancy and fiduciary management services and proposed remedies. The CMA has asked for feedback on the proposed remedies, which include requiring trustees to tender for a fiduciary manager (if they haven’t done so) and to regularly set and review strategic objectives with investment consultants (deadline 24 August 2018). Read more