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Pensions Insights – April 2021

26 April 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 contact your usual contact.

Case Law 

Unregulated brokers and SIPPS - Adams v Options UK Personal Pensions LLP 
In the latest in a series of case law the Court of Appeal has held that an individual was entitled to recover his investment from a pension fund operator where this had been arranged through an unregulated broker.

Mr Adams had been introduced to Options UK Personal Pensions LLP, (formerly known as Carey Pensions UK LLP ("Carey")) by an unregulated broker to facilitate an investment in storepods.  Mr Adam's pension was transferred from Friends Life to a Carey SIPP which permitted such investment.

The Court held that as the broker was not authorised by the FCA to carry out regulated activities (including advice on or making arrangements in relation to investments) the SIPP agreement with Carey was unenforceable (in terms of the Financial Services and Markets Act 2000) which entitled Mr Adams to recover money or other property paid or transferred under the agreement and compensation for any loss. Read more on this case >

New Law 

General Levy Regulations in force
The Occupational and Personal Pension Schemes (General Levy) (Amendment) Regulations 2021 came into force on 1 April 2021.

These regulations increase the general levy rate (which funds the Pensions Regulator, the Pensions Ombudsman and pensions activities of the Money and Pensions Advisory Service) for both occupational and personal pension schemes and introduce separate rates for defined benefit and hybrid, money purchase and Master Trust occupational pension schemes.

Following consultation these changes were thought to "better reflect the differing levels of attention devoted by the supervisory regime" to the different types of schemes.

The new rates apply for the financial years beginning with 1st April 2021, 1st April 2022 and 1st April 2023.

News

PSIG Updates scams code of practice
New version 2.2 of Combating Pension Scams: A Code of Best Practice is effective from 1st April 2021.

This new version comprises:

  • Practitioner Guide which sets out due diligence steps that should be taken in assessing scam risks;
  • Technical Guide which details the rationale, legislative and regulatory requirements;
  • Resource Pack containing materials that can assist with carrying out the due diligence process; and
  • Summary of Changes from the previous version of the Code.

Those changes have been made to take account of a host of regulatory and legislative developments, case law, Pensions Ombudsman determination and intelligence collected by regulatory bodies including TPRs Combat Scams Pledge Initiative, the FCAs updates to its ScamSmart site which were made in response to the pandemic and the regulations which are expected to be made under the Pension Schemes Act 2021 in relation to transfers.

PPF confirms Fraud Compensation Levy for 21/22
Whilst confirming that following a court ruling that clarified that occupational pension schemes set up as part of a scam were eligible to claim on the Fraud Compensation Fund (FCF), the PPF state that it has received claims from such schemes with a total value of over £40m.

In response to this the PPF are seeking additional funding and will therefore raise a levy of 75p per member (30p for master trusts) in 2021/22 on relevant occupational pension schemes. This is the maximum levy permitted allowed under current regulations and will be collected by the Pensions Regulator on behalf of the PPF.

TPR consults on single code of practice
TPR has commenced consultation on the first phase of its work to consolidate its 15 codes of practice with a draft that brings together 10 of the existing codes of practice into one.  

The draft code consists of 51 shorter, topic based modules and incorporates content from 10 of the existing codes mainly dealing with the governance and administration of pension schemes, changes introduced by the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018 which relate to effective systems of governance and the own-risk assessment are also included.

The consultation closes on 26 May 2021.  

Further Reading

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