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Pensions Insights - February 2022

25 February 2022

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

Auto-Enrolment - No reasonable excuse for non-compliance - Skewer House Taunton Ltd v The Pensions Regulator, Condor Estates Ltd v The Pensions Regulator and Total Industrial Machines Ltd v The Pensions Regulator

The First Tier Tribunal has dismissed claims by a number of employers subject to auto-enrolment duties that they had a reasonable excuse for non-compliance with such duties.  In the similar cases employers argued that they had a reasonable excuse in relation to failures to submit declarations and re-declarations of compliance as they had not received relevant notices from TPR (including reminder notices and compliance notices), despite having successfully received subsequent penalty notices.

In dismissing the claims of reasonable excuse the Tribunal took into account the statutory presumption that a notice posted to the registered address of an employer can be presumed to have been received (and that no strong evidence to the contrary was presented) and that even if reminders had not been received the employer should be aware of its legal duties in relation to auto-enrolment.

New Law 

Guaranteed Minimum Pension Fixed Rate Revaluation

Following government consultation to review the fixed rate of revaluation provided for GMP, this will be changed from the current rate of 3.5% (which has been in place since 2017) to 3.25%.

The Occupational Pension Schemes (Schemes that were Contracted-out) (No. 2) (Amendment) Regulations 2022 have been made as a result of this review and come into force on 6 April 2022 with the new rate being applicable to contracted-out members who leave pensionable service in the period 6 April 2022 to 5 April 2027.

News

Deadline for DB/Hybrid Scheme Returns

TPR has issued a reminder that for DB and hybrid schemes the deadline for completing a scheme return is 31 March 2022.  There are a number of new questions in this year's scheme return and the following information will require to be provided where relevant:

  • For schemes with over 100 members - the website addresses where the scheme’s statement of investment principles (SIP) and implementation statement have been published;
  • For schemes with relevant assets of £5b or more - the website address where the scheme's climate change report has been published;
  • For schemes where a covenant assessment has been carried out - the trustee assessment of the employer covenant grading (if available);
  • For hybrid schemes that require to carry it out - information about the more detailed value for members (VFM) assessment;
  • For schemes which require to provide a chair's statement in respect of DC benefits - the website address where extracts from the chair’s statement have been published

Proposed extension of automatic enrolment

The pensions (Extension of Automatic Enrolment) Bill has been published and received its second reading on 25 February.  As currently drafted this amends the auto-enrolment framework set out in the Pensions Act 2008 to abolish the qualifying earnings threshold (currently £6,240) and to reduce the age at which jobholders are eligible to be automatically enrolled from 22 to 18.

Pensions Dishonesty Unit launched by the Ombudsman

The Pensions Ombudsman has established a dedicated Pensions Dishonesty Unit to investigate allegations of serious breaches of trust, misappropriation of pension funds and dishonest or fraudulent behaviour by pension scheme trustees.

The principal aim of the new unit is to hold wrongdoers responsible for the unlawful gains they have made and ensure they repay these monies to the scheme. The Ombudsman notes that while some of the schemes may also be eligible for the Fraud Compensation Fund, any money obtained for the members through the new unit will come directly from the hands of those responsible.    

Further Reading