Police pension rules not incompatible with ECHR –
Sharon Green, Jacqueline Andrea Jennings, Paul Robert Sneller v Metropolitan Police Commissioner v Secretary of State for the Home Department
The High Court has found that provisions in the Regulations governing the Police Pension Scheme which terminate a widow's or surviving civil partners pensions on the remarriage or cohabitation of a recipient are not incompatible with Convention rights (as scheduled to the Human Rights Act 1998).
The claimants in this case argued that the so called "Cessation provisions" which caused a widow's/survivor's pension to cease (broadly on remarriage, forming a new civil partnership or cohabiting with a partner as if spouses/civil partners) were incompatible with the human rights contained in Article 12 (Right to marry), Article 8 (Right to respect for private and family life) and Article 14 (Prohibition of discrimination). The Cessation provisions did not apply where the scheme member had died in the line of duty, but that was not the case for the pensions payable to any of the claimants.
A lot turned on the fact that the scheme in question was an older scheme which had been closed and replaced with a new scheme which active members had been invited to join. The new scheme did not include the same Cessation provisions and that was explained to members at the time, but none of the members in respect of which the claimants claimed pensions rights had transferred to the new scheme.
After a detailed consideration of the various aspects of the case including the circumstances of the claimants, the Articles cited and exploration of where certain treatment was objectively justified the Court found that in the circumstances there was no human rights violation and the claim failed.
CMA Order to be integrated into UK pensions regime
The DWP has now published the outcome of consultation on delivering the Competition and Markets Authority (CMA) recommendation for trustee oversight of investment consultants and fiduciary managers.
Trustees are already required to comply with the requirements of the CMA Order which has been in force from 10 December 2019.
The draft Occupational Pension Schemes (Governance and Registration) (Amendment) Regulations 2019 amend current legislation to integrate the CMA Order into pensions law and will:
- require trustees of occupational pension schemes, subject to certain limited exceptions, to carry out a tender process for fiduciary management services and set objectives for their investment consultants; and
- allow The Pensions Regulator to oversee the requirements.
It is anticipated that the Regulations will come into force on 1 October 2022 and that TPR will be updating their guidance to reflect the final regulations ahead of commencement.
Amendments to the Register of Occupational and Personal Pension Schemes Regulations 2005, will require TPR to ask additional questions on scheme returns for trustees to complete which it is stated gives opportunity for schemes to certify compliance or non-compliance and to provide TPR with intelligence which it may be beneficial to investigate further.
Provision of such information via the scheme return will replace the current requirement for Compliance Statements in accordance with the CMA Order to be submitted directly to the CMA.
Feedback from TPR and FCA on driving Value for Money in defined contribution pensions
Following joint consultation TPR and the FCA have published a statement setting out feedback they received during that consultation and next steps. This confirms that the feedback indicates agreement that a holistic approach to assessing VFM was needed and that the three elements proposed being investment performance, customer service and scheme oversight and costs and charges were the right ones. However, it is also noted that there are a number of areas where there is no clear consensus as to the way forward so a programme of further work is to be undertaken in order to examine the options that are likely to be the most effective and proportionate. Further consultation on the proposals is expected towards the end of 2022.
TPR's new corporate plan
TPR has confirmed in its corporate plan that for the next two years it will continue to call on schemes to take its pledge to combat pension scams, work closely with the DWP and FCA on a future consultation for a Value for Money Framework and assess how smaller defined contribution schemes offer value for money.
In addition it is expected that TPR will launch a programme of education, highlighting the steps schemes need to take to meet their dashboard duties, including what data to prepare.
It is also confirmed that TPR plans to launch its second consultation on a new defined benefit funding code this autumn, with the code operational from September 2023. Changes in the new code will be forward-looking, so only schemes with valuation effective dates on or after its commencement date will be affected.
Pension Scams – Guidance on Reporting
In connection with newly issued guidance on reporting pensions scams TPR has commented that it is the pension industry that is best placed to recognise signs of a scam and has the power to act and urged those in the industry to help protect savers by reporting concerns.
The guidance has been produced by TPR in partnership with Action Fraud and the FCA and sets out what to report (including in relation to red and amber flags raised in connection with transfer requests), who to report this to and when.