Top of the agenda

1. Autumn Statement – Six month extension until the minimum contribution rates increase

George Osborne, the Chancellor of the Exchequer, delivered his 2015 Autumn Statement and Spending Review on 25 November. The Statement announced that the dates for when the minimum contribution rates for qualifying schemes increase are being moved back 6 months to align with the tax year – 6 April 2018 and 6 April 2019 respectively. This realignment is intended to “simplify the administration of automatic enrolment for the smallest employers in particular”, according to the Statement. Further changes contained with the Statement include:

  • New single-tier state pension. The new weekly pension will be set at £155.65 and will come into effect from 4 April 2016.
  • ‘Triple lock’ set to continue. The Statement has confirmed that the triple lock, which ensures the state pension rises in line with whichever is highest out of CPI inflation, RPI inflation or Bank rate, will remain. As a result of this triple lock the Basic State Pension will increase by £3.35 a week to £119.30


2. Director in Carrington Wire case disqualified for 12 years

A director has been disqualified for 12 years for his part in a pension scheme losing more than £26m. Mr Richard Martin Williams was charged with failing to make sure the scheme met obligations to members. Williams let dormant company Gillico Limited facilitate a series of transactions which enabled a Russian company to avoid its liabilities to the scheme and thereby leaving its 500 members with nothing.

Details on the background to this case are available here.

3. British Airways Plc v Spencer [2015] EWHC 2477


The High Court has partly allowed an appeal against a deputy master’s refusal to permit British Airways to call, or rely on, expert evidence in proceedings against the trustees of its pension fund relating to pension increases.


Warren J held that there were many areas on which expert evidence might be relevant, and some areas where it would not just assist, but was necessary.

The High Court, in partially allowing the appeal, has provided a useful guidance for interpreting CPR 35.1. This rule states that: “Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.”

Warren J indicated that the correct approach when determining whether expert evidence should be admitted is to look at the pleaded issues and to ask the following “important questions”:

  • Is expert evidence necessary to resolve the issue? If yes then it must be admitted.
  • If the evidence is not necessary, would it assist the court in resolving the issue? If it would assist, but is not necessary, the court should determine the issue without it.
  • If the evidence would assist but is not necessary, in the context of the proceedings as a whole, is it reasonably required to resolve the proceedings? If so, a balance should be struck when considering whether that evidence should be admitted.

In striking that balance a judge should consider the following points:

  • the value of the claim;
  • the effect of a judgment either way on the parties;
  • where the costs will fall, and;
  • any delay likely to be entailed by the production of the evidence.

This decision cements the centrality of the overriding objective to the court’s decision making. Whilst appellate courts would normally be hesitant about interfering in case management decisions such as this, they should not be over-enthusiastic in excluding evidence in order to save time and cost.


4. The Pensions Regulator publishes new draft DC Code for consultation

The TPR has published a new draft DC code for consultation, with the aim of raising standards and administration.

The new draft is shorter and simpler than the previous 2013 code. It explains the standard of conduct and practice that TPR expects trustee boards to meet in their compliance with their legal duties.

The draft code is divided into six sections: the trustee board, scheme management skills, administration, investment governance, value for members and communicating and reporting.

The TPR urges trustees reading the code to undertake appropriate training if they are not fully aware of the legislation that applies to their scheme. The consultation is open until 29 January 2016.

Further to the new code, TPR plans to consult in Spring 2016 on a new supplementary know-how guidance that will recommend best practice for trustee boards.

5. TPR updates DC duties FAQs

The list of FAQs on the new duties relating to governance and control measures for occupational DC schemes that came into force in April 2015 has been updated.

The new questions provide greater clarity on:

  • Charge controls: in particular when the default fund charge controls may apply and which schemes may be exempt,
  • Governance standards: which schemes may be exempt based on the wording of the applicable regulations,
  • Chair’s statement: what the chair’s statement is required to address.

6. TPR could monitor compliance with auto-enrolment more effectively with access to current payroll information about employers

A report published by the National Audit Office (NAO) on 4 November 2015 contains a warning about auto-enrolment for TPR. With a further 1.8 employers expected to reach their staging dates in the next two years it is vital that TPR is suitably positioned to cope; many of the employers soon to be affected will be small and micro businesses with differing needs and requirements to those of the larger employers. To assist with the continued auto-enrolment implementation the report advises that TPR should expedite its plans to liaise with HMRC. The report suggests that TPR would be able to monitor compliance more effectively if it could obtain current payroll information about employers. There is expected to be a total increase of nine million in people “newly saving or saving more in qualifying workplace pensions” by 2018 as a result of auto-enrolment, it is vital the system’s infrastructure is suitably robust to support this significant increase.


7. Sayer: Ombudsman dismisses a complaint and rules that there is no duty on provider to inform a member of GAR before transfer

The Pensions Ombudsman has dismissed a complaint by Mr Martin Sayer, a member of an occupational defined contribution scheme, against Abbey Life Assurance Company Limited and Towers Watson Limited. Mr Sayer complained that that scheme provider and administrator, respectively, both failed to inform him that a guaranteed annuity rate (GAR) applied to his individual policy before he transferred out of the scheme in 2002. The member complained that his deferred benefits under the receiving scheme were now worth around £120,000 less than they would have been if he had not transferred.

The Ombudsman determined that the complaint should not be upheld because:

  • the respondents were not advising the applicant about a transfer out of the Plan; and
  • there was no mandatory obligation to disclose information regarding GARs on transfer.

Round up

8. DWP issues consultations to examine reducing regulatory burdens and DC flexibility

The Department of Work and Pensions (DWP) issued a consultation on 12 November 2015; its purpose is to explore small but important changes to existing regulations whilst also reducing regulatory burdens.

The consultation will examine:

  • potential changes to the Occupational Pension Schemes (Scheme Administration) Regulations 1996 and the Occupational Pension Schemes (Charges and Governance) Regulations 2015. An example of a proposed change is to delete the current accounting requirement for investment disclosure and replace it with a simpler statement from the auditor of compliance with FRS 102 and the pensions SOPR noting any material departures;
  • views on changes to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 which update the existing regulatory requirements, and remove the requirement for an auditor’s statement of contributions from large multi-employer schemes;
  • views from the pensions industry about where burdens on those running schemes can be reduced whilst maintaining member protection.

The DWP has now confirmed that no changes will be made to the Occupational Pension Schemes (Investment) Regulations 2005, having found that guidance for trustees can be more effective than regulatory change in this area.

The consultation will remain open until 9 December 2015.

The DWP is also consulting on a number of technical changes to existing secondary legislation to reflect the introduction of DC pension flexibility reform. Consultation on the draft regulations will close on 11 January 2016.