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Pensions Insights - February 2021

25 February 2021
In our monthly update, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy. If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to get in touch with your usual contact.

Case Law 

Equality Act non-discrimination rule overriding - London Fire Commissioner and others v Sargeant [2021] 2 WLUK 207
This case is the latest in a series of cases concerning changes to a number of statutory schemes which were found to constitute unlawful age discrimination.

In defence of the discriminatory treatment identified the fire and rescue authorities (FRAs) attempted to claim the protection of provisions in the Equality Act 2010 that provide a statutory defence where discriminatory treatment occurs as a result of actions taken pursuant to a requirement of an enactment.  The FRAs contended that as the scheme rules were contained in legislation they were simply following the scheme rules and that their actions were required under the "enactment" governing the scheme. 

The Equality Act 2010 however also provides that all occupational pension schemes are deemed to include a non-discrimination rule and this case explored the interaction between this provision and the statutory defence.

The Employment Appeal Tribunal found that any scheme provision, even one contained in legislation, that required action to be taken which produced an unlawful discriminatory result was overridden by the non-discrimination rule which was already effectively included in the rules of the scheme.  As a result the FRAs could not rely on the statutory defence that they were required to act as they did by an "enactment" and their appeal was dismissed.

New Law

Pension Schemes Act 2021
The Pension Schemes Act 2021 has now received Royal Assent and been published, but that is only part of the picture in relation to the new provisions this Act introduces.  Further steps will be required before many of the Acts provisions become effective.

In relation to many of the new provisions, whilst the Act sets out the framework, the detail of how provisions will operate in practice is expected to be contained in regulations. This was made clear throughout the Parliamentary process.  It is to be expected that those regulations will be the subject of consultation with the DWP seeking feedback on what is proposed.  It is also expected that guidance will be required from the Pensions Regulator on various aspects including in relation to the new criminal penalties that the Act introduces and how it will bring and deal with prosecutions. 

There are no indications from Parliament or the DWP on timescales for regulations etc, however the Pensions Regulator has stated (in relation to ongoing consultation on the DB scheme funding code) that secondary legislation, is expected to be forthcoming in the first half of this year.


Public Sector Exit Payments cap to be abolished
Since November 2020 the Public Sector Exit Payments Regulations 2020 have broadly speaking sought to impose a cap of £95,000 on exit payments for employees leaving the employment of certain public sector authorities.

The Government has now issued a direction disapplying these regulations with effect from 12th February and have confirmed that these regulations will be revoked in due course. The regulations were subject to various legal challenges and the reason given for the revocation is that the cap may have had unintended consequences.

Those who have been subject to the cap since its introduction are now expected to take this up with their former employers who are "encouraged to pay to any former employees to whom the cap was applied the additional sums that would have paid but for the cap". 

PPF Levy Rules for 2021/22
The levy rules for 2021/22 have now been published which starts the clock ticking towards the deadline for having any contingent assets certified before the usual March deadline.

Given the UK's departure from the EU, amendments have been made by the PPF to the contingent assets standard forms so care will require to be taken to ensure that the correct, updated forms are used for any contingent assets being submitted.  The PPF have confirmed that any contingent assets already certified and executed will not require to be re-executed to reflect this change.

The Levy rules have also been amended to reflect that supporting documentation relating to Contingent Assets (including guarantor strength reports) should be submitted to the PPF by email.

TPR Reports increase in enforcement activity 
The Pensions Regulator ("TPR") has reported in its latest compliance and enforcement bulletin that the use of its statutory powers over the last quarter of 2020 increased by almost 50% when compared to the previous quarter.

TPR introduced a number of easements in response to the pandemic including in relation to reporting of late payment of contributions to schemes, but they have now lifted those easements and note that they are returning to "normal levels of enforcement activity".
In the last quarter of 2020 TPR used its powers in relation to auto-enrolment breaches specifically over 24,000 times.

Further Reading