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First-tier tribunal revokes Escalating Penalty Notice - DNS Retail Management Ltd v Pensions Regulator
The appellant challenged an Escalating Penalty Notice accruing at a daily rate of £500 for failure to comply with a Compliance Notice issued in relation to failure to complete a re-declaration of compliance with auto-enrolment duties.
Whilst the appellant contended that various items of correspondence including notices were note received, TPR sought to rely on the presumption of due service of the relevant notices in the ordinary course of post.
In relation to the process of appeal, the Tribunal made clear that its function is not that of an appellate court considering an appeal. It must simply make its own decision on the evidence before it (which may differ from that before the Regulator).
On balance the Tribunal's view was that the appeal must be upheld noting that an appeal based on assertion and no more could not succeed, but that there were several material factors which lend extra support to the appeal including that:
- the appellant's address on the Companies House website is confusingly presented so it was quite plausible that its use may have led to mail not being delivered correctly;
- evidence of post addressed to the appellant going astray; t
- he appellant responded immediately to later correspondence that they did receive; and
- the appellant did not have ‘form’ for breaching their AE obligations.
Overall the Tribunal was persuaded that the relevant documents were not delivered and that non-compliance with the EPN was attributable to that fact.
No New Notifiable Events – 6 months overdue
At the time of writing the DWP are yet to publish a response to the consultation that included the draft Pensions Regulator (Notifiable Events (Amendment) Regulations 2021. The draft Regulations included wording indicating that these would come into force on 6 April 2022. With that date now passed it seems that the new requirements will be delayed, but there is no clarity on for how long.
TPR has though published a blog Merger and acquisitions: company directors must help pension trustees protect savers -reminding employers to engage the scheme/trustees early in relation to any proposed corporate activity noting that trustees are the first line of defence in ensuring pension scheme members are treated fairly in major corporate transactions, including M&As, and during restructuring exercises.
TPR highlights common auto-enrolment errors
After conducting a series of in-depth compliance inspections of more than 20 large employers across the UK, with a total of nearly 1.5 million staff, TPR has confirmed that these highlighted a number of common errors and has warned employers to ensure they are complying with their duties.
Common errors identified were in respect of calculating pensions contributions (included using incorrect earnings thresholds and miscalculating maternity pay) and in respect of communicating to staff about their workplace pension (including inaccurate wording or using online portals for communicating general pensions information rather than direct emails to staff about how automatic enrolment affects them). It is specifically noted that employers should check TPR guidance when writing to staff about whether their scheme uses relief at source or net pay arrangements.
TPR notes that while the inspected firms successfully enrolled eligible staff into a pension and made contributions, administrative errors with their ongoing pension duties put staff at risk of not receiving the pensions they are due. The firms, which included those operating in the transport, hospitality, finance and retail sectors, have now corrected or are working to correct errors, including making backdated contributions where required.
PPF Levy expected to reduce
The PPF has announced that almost all PPF levy payers will see a reduction in their levy next year setting out a £200 million levy estimate for 2023/24, down from £630m in 2020/21 and £390m in 2022/23.
It notes it hopes that schemes will use the reduction in their levy payments to further strengthen the position of their own scheme and improve the outlook and security for their members confirming that its reliance on levy will further reduce over time and that work is underway to simplify how the levy is calculated.
PASA Guidance on DC Transfers
Recognising the increasing legislative obligations impacting pensions transfer including new transfer regulations, the stronger nudge to pensions guidance and the increase in Normal Minimum Pension Age, PASA has released new guidance for DC transfers.
The primary aim of the guidance is stated to be to improve the overall saver experience through faster and more secure transfers and this sets out:
- a standardised and non-prescriptive process flow for transfers, highlighting the important ‘what’ rather than the ‘how’;
- a recommendation trustees agree acceptable Service Level Agreement timescales for processing transfers upfront with their administrators set within the context of an ever changing regulatory environment; and
- template communications for improving transfer processes.
TPR issues statement on LDI
TPR has issued initial guidance setting out the main points it expects trustees to consider in managing investment and liquidity risks in the face of current market conditions.
Expectation of trustees of DB schemes include that they should review operational processes, liquidity position, liability hedging position and funding and risk position in addition to considering how current yields impact other areas of the scheme. The statement offers some guidance on each of these aspects and how these might be approached.
In DC schemes it is expected that trustee should:
- maintain a long-term perspective when reviewing recent market volatility and performance
- review their investment strategy, and operational factors in executing this strategy
- communicate with savers who are approaching retirement to make them aware of their options and emphasise the importance of seeking financial advice
- encourage savers to seek regulated financial advice or speak to MoneyHelper before making decisions about their pension savings in light of market conditions
- remain vigilant for scams and suspicious transfers
- review processes to ensure they can act at speed where necessary