Current Issues – May 2021

TPR Single Code of Practice – Atkin Response: We have responded on behalf of small schemes where we think the requirements are disproportionate and have therefore asked TPR to consider redefining exemptions to be a better measure that excludes small schemes, provide template policies, and consider the phasing in of requirements.

TPR Annual Funding Statement – Key Messages: A useful indication of what the TPR is focusing on, particularly those with a valuation in progress. Covenant continues to be a key concern and TPR is keen that schemes adopt a ‘Long Term Funding Target’ (LTFT). With regards to mortality, TPR advises that any moves to place greater weight on the increased mortality experienced in 2020 because of Covid-19 would have to be justified and documented by the trustees.

Value for Member Tests – Scheme with DC Benefits: From 6th October 2021, trust-based DC schemes (or schemes with a DC element, including underpins but excluding AVCs) that have under £100m in assets will have to carry out Value for Member tests. Schemes in this category will need to compare themselves to the terms, features, and performance of large schemes. If they do not match up, they will either need to upgrade their offering or transfer and wind-up.

In some circumstances, an alternative option might be to see if these benefits could be restructured to become DB in nature.

Pension Transfers – New Measures to Fight Scams: The DWP has published a consultation paper on regulations designed to protect scheme members against pensions scams. The regulations will impose additional conditions which will have to be met before a member has a statutory right to a transfer. Whilst the intent behind the paper is welcome, there have to be concerns as to how this might impact legitimate transfer requests and where the ultimate responsibility lies if these are, subsequently, found to be scams.