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Speaker
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Transcript
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Chris Brown, Director, Burges Salmon
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Hello everyone I'm Chris Brown, a director in the Pensions team here at Burges Salmon and welcome to episode six which is the final episode of season two of the Burges Salmon Pensions Pod. In this episode we will be discussing a roundup of latest pensions news and updates, looking at all sorts of things like dashboards, transfers and the regulator's annual dc survey.
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Helen Cracknell, Solicitor, Burges Salmon
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Hi everyone it's Helen Cracknell speaking, solicitor in the Burges Salmon Pensions team. In today's episode we're joined by Emily Clarke of our team, thanks for joining us Emily.
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Emily Clarke, Solicitor, Burges Salmon
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Hi everyone, thanks very much for having me, Helen and Chris.
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Helen
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So firstly we're going to be talking about pensions dashboards today, so very much a hot topic in the industry. Dashboards are of course online banking for pensions and I'm sure our listeners will have heard of them.
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Emily
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Yes that's right, so we've been talking about dashboards for a little while but the reason why we're talking about them today is because the government has posted a response to its consultation on the draft regulations.
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Chris
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Yes that's right, so what's new, Emily?
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Emily
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Well the government has confirmed that there'll be no fundamental change to the proposals, but there are a few changes to be aware of, and I think Catrin Young, so that's our practice development lawyer in the team, I think she explains it quite nicely in our Burges Salmon blog, where she says that essentially there's been some tinkering around the edges.
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Chris
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Right thanks so some tinkering around the edges, can you just tell us what they are please?
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Emily
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Yes, so the changes include extensions to a couple of the staging deadlines. So the staging deadlines for the first two cohorts, so that includes master trusts with 20,000+ members and money purchase schemes used for auto enrolment with 20,000+ plus members again, so the staging deadlines for those cohorts have been extended by two months and saw the first cohort, so that's master trusts with over 20,000 members, the staging deadline will be the 31st of August 2023 but the connection window will still start on the 1st of April 2023, so that means that these schemes will have a five month window to connect, rather than three months.
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Helen
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I'm sure that'll be really welcomed by people, definitely.
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Emily
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Yes and all other schemes will just still have a one month connection window. I should also add that the staging deadline for public service pension schemes has been extended by five months and that's to allow further time to implement the McCloud remedy.
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Helen
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So of course for our listeners the McCloud remedy is the government's proposed remedy to address age discrimination that was found to have arisen in the McCloud judgment, and if any of our listeners that are involved in the public sector schemes and would like to know more about McCloud, do reach out to us for more information on this. Sorry to interrupt, Emily.
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Emily
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No that's fine and so still looking at staging deadlines but looking at hybrid schemes, the proposals here have also been simplified.
So hybrid schemes, we now know, should add up the total relevant members across their db and dc sections and then should treat the entire scheme as db in order to determine the staging deadline and we know that the earliest staging deadline for hybrid schemes will be the 30th of November 2023.
There's also been some new provisions that will be relevant for schemes and ppf assessment, and I won't go into them in any detail now but the takeaways are listed in our recent Burges Salmon blog.
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Helen
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Thanks Emily, that's really helpful just to have the updates laid out like that for our listeners.
Just one further one to pick up on, on matching we now understand that the government won't mandate the provision of national insurance numbers to allow for data matching, although of course individuals will be strongly encouraged to provide a national insurance number, there's also the other element that where there's a potential but unconfirmed match, so where their members haven't provided their national insurance number, schemes will have to provide a limited amount of data on the dashboard together with an error message and this is intended to prompt the members to contact the scheme to try and resolve this and then if it's not resolved the scheme has to delete this data off the dashboard.
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Chris
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That's right, I was going to say there's also been more clarity on value data as well isn't there, so how schemes value scheme benefits for different elements of benefit design, so for example if there's different charges of benefit.
Emily, what would you say are the key takeaways for our listeners?
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Emily
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Yes well I would say the most important thing is the government has reiterated that it remains fully committed to making pensions dashboards happen at the earliest opportunity and they've said that trustees should focus their preparations on making sure that their data is ready and they have plans in place for how they intend to connect to the pensions dashboard and we now know that the regulations aren't likely to change dramatically and there's enough information out there and clarity for schemes to go ahead with their preparations.
On timing as well it's just worth mentioning that there's likely to be a squeeze on administrator resource as schemes get ready to connect, so trustees should just keep this in mind when planning ahead.
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Helen
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Definitely, the earlier the better.
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Chris
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Yes absolutely.
Okay, so moving on to something different now, Helen we've already covered transfers and the new transfer check requirements.
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Helen
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Yes, that was episode four of this series of the Pod.
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Chris
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But since then we've had a joint statement from DWP and the Regulator where they say that where trustees believe the regulations mean there is no statutory right to transfer but they've concluded following due diligence that the proposed transfer is at low risk of a scam, trustees can grant a discretionary transfer where scheme rules allow. So Emily, can you tell us a bit about that please?
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Emily
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Yes that's right. I think in our opinion that marks quite a shift from the position previously held by the Regulator, so as we understood it to be the original guidance said that trustees should not look to circumnavigate the regulations by making a non-statutory rules-based transfer.
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Helen
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I was going to say it sounds like that contradicts the original guidance?
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Emily
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Yes it potentially does, but the guidance has also been updated to reflect the joint statement and it recognises that scheme rules may still allow non-statutory transfers, even when risk indicators are present.
So, the position now seems to be that trustees should consider the checks and the guidance when assessing whether to grant a non-statutory transfer and where they consider that the transfer would be in the member's interests and does not pose a risk, the trustees may be able to grant a non-statutory transfer.
But the guidance does still say that trustees should not use non-statutory transfers to avoid carrying out due diligence but yes, even so it does still seem to be quite a shift from the previous position.
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Chris
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And that's a difficult decision for trustees isn't it, to decide whether a transfer is in members interests and to have to think about whether it poses a risk, but how should trustees act on the change?
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Emily
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Well if they want to use the change and grant non-statutory transfers, there's a few things they'll need to do.
So firstly, they'll need to seek advice on whether there is a non-statutory transfer power under the relevant scheme rules and they'll need advice on how this rule operates.
And then they'll need to ensure that if members go ahead and take a non-statutory transfer, they'll need to ensure that they those members sign an appropriate written discharge form because, as you know, one of the key differences of the non-statutory transfer regime is that trustees will not have the benefit of a statutory discharge.
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Chris
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Yes absolutely. Okay so, hopefully that was a helpful update on the statutory transfer check requirements.
Emily I think you've got an update on the dc side as well?
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Emily
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Yes, just a very quick update, which is that the Regulator has reported on its annual dc survey, and according to that report trustees of most schemes with less than 100 members are unaware of their duties in relation to the new value for members assessments.
And a couple of similar points that the report picks out so, it shows that a surprising number of smaller schemes are unaware of the Regulator's codes of practice, or have never used them, and are also unaware of the upcoming single code.
And on the same theme, the survey found that only a few smaller schemes are devoting time or resources to climate related issues. And in response to all of this the regulator has said that trustees of smaller dc schemes should ensure that they're ready to meet new regulatory requirements.
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Chris
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So this probably just reiterates that whatever your size of scheme just reiterates the importance of focus on good governance I think,
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Emily
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Yes, I think that's absolutely right.
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Helen
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Just a short GMP equalisation update from me, everyone's favourite topic. I'm looking at it really frequently now for clients, so PASA have actually just published a checklist at the end of June for past transfers, which could be really helpful for our trustee listeners. So this is a short four-page checklist with questions for schemes to consider as part of their GMP equalisation projects, and as it says in the intro the checklist can be used to inform discussions, capture the decisions made by trustees and provide a really good audit trail for the future, which as everyone knows is definitely the key in all things pensions, the audit trail.
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Chris
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Yes absolutely, it feeds into good governance doesn't it.
I suppose also Helen our clients are at different stages of their GMP equalisation projects and for anybody who wants to listen to our podcast on that, then that's episode one of season two.
So I think all that remains to say is thanks for coming on the Pod Emily, that was a really helpful update on recent topical bits and pieces.
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Emily
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Yes thank you for having me.
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Chris
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Our pleasure.
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Helen
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Thank you for listening to the Burges Salmon Pensions Pod. If you'd like to know more about our Pensions team and how our experts can work with you, you can contact myself, Chris, Emily or any of our pensions team via our website.
This episode is the sixth and final episode of our second season. All of our episodes, so season one and season two, are available on Apple, Spotify or wherever you listen to your podcast.
Don't forget to subscribe and thank you for listening.
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