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 meetings, and to support the legal update item on your next trustee agenda.

TPR guidance on Chair’s statement

The Pensions Regulator has published guidance clarifying its expectations as to the content of the DC Chair’s statement, and highlighting where more detailed information about scheme processes and evaluation methods is expected. Read more

Our guide to preparing for the Chair’s statement will help you identify the processes you need to have in place to meet the legal requirements of the statement.

ACTION: Review the guidance and assess whether your scheme’s processes require updating to meet the Regulator’s expectations for the Chair’s statement.

Transaction cost disclosure

From 3 January 2018, the FCA’s Handbook rules will require asset managers to provide certain information about transaction costs on request. This will help trustees meet their obligations to review and consider the value for money of transaction costs and administration charges. Read more

The government is also consulting on plans to require schemes that provide DC benefits to publish details of investment charges annually and to provide more detailed disclosure on costs and charges in the Chair’s statement. The changes are due to take effect from 6 April 2018 (and in relation to the Chair’s statement, for the first scheme year ending on or after 6 April 2018). Read more

ACTION: Liaise with asset managers to gather cost information in Q1 2018 and in good time ahead of the deadline for your next Chair’s statement.

TPR governance expectations

The Pensions Regulator has published three tranches of guidance as part of its ‘21st Century Trusteeship’ campaign, which aims to improve governance standards. The themes are ‘good governance’, ‘clear rules and responsibilities’ and ‘clear purpose and strategy’.

The guidance includes links to other material, including a newly published guide to data improvement plans, an example of committee terms of reference, a sample business plan and a sample annual planner. Read more

ACTION: Review the guidance and consider whether scheme practices should be updated.

MiFID II actions NEW!

Revised rules for fund managers effective from 3 January 2018 introduce changes that may affect pension schemes. The PLSA has published a short action list for schemes to consider including, for example, the need to obtain a Legal Entity Identifier (if one is not already in place); and taking the opportunity to review investment management agreements. Read more

ACTION: Review the action list and plan to address any items that apply to your scheme.

Watch this space

– The government proposes changes to statutory transfer rights from late 2018, to help combat pension scams. Read more

– New standards for professional trustees are under consultation and could be introduced as soon as next April. These could particularly affect trustees who fall within the Regulator’s professional trustee description without being part of a wider professional trustee organisation. Read more

Anti-money laundering duties UPDATED!

Trustees of occupational pension schemes have additional compliance duties under new anti-money laundering regulations from 26 June 2017.

The most immediate duties relate to record-keeping and to provision of information when entering into a transaction/business relationship with parties (such as banks/some advisers) that are required to carry out money laundering checks.

There is also a requirement to provide HMRC with information, normally by 31 January following a tax year in which specified tax charges have been triggered (first deadline: 31 January 2018 but HMRC will not impose penalties if schemes comply by 5 March 2018). Schemes must register with the Trusts Registration Service to provide this information. Read more

ACTION: Review the data required and implement a process to fill any gaps. Confirm whether the HMRC reporting duty has been triggered by a relevant tax charge in 2016/17.