Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
This week we cover topics including: TPR: trustees with struggling sponsors should engage early; Possible future ‘new UK version of GDPR’; Government supports extension of AE; Technical changes to PPF and FCF regulations; High Court: executing a deed ‘in the presence of a witness who attests the signature’; Annual GMP increase Order; Pensions Academy Online – 28, 29 and 30 March 2023; The Gender Pensions Gap: what it is and how to fix it – 23 May 2023.
TPR: trustees with struggling sponsors should engage early
The Pensions Regulator (TPR) has published a blog post encouraging schemes to engage with it early where they are concerned that a scheme sponsor is struggling, or where they are already involved in a restructuring or insolvency process. The blog discusses TPR’s recent involvement in securing benefits in two Arcadia schemes following the employer’s insolvency. It pulls out three lessons for trustees:
- the importance of having a comprehensive financial information-sharing package that includes detailed forward-looking forecasts and how these may vary. This should be assessed regularly (ideally quarterly) by appropriately qualified independent covenant advisers, with costs borne by the sponsoring employer;
- the need to involve TPR at an early stage when it becomes clear that trading for a sponsoring employer is challenged, when the viability of a company is uncertain or if there are issues or defaults with other key financial creditors; and
- the importance of ensuring scheme trustees have the right skills to deal with a distressed situation and have access to expert advisers.
Possible future ‘new UK version of GDPR’
The government has published a Bill making a range of amendments to current data protection laws contained in the UK GDPR. The first version of this Bill was introduced to Parliament in July 2022, but was paused in September 2022 to enable greater ministerial scrutiny.
The ‘common-sense-led UK version of the EU’s GDPR’ is intended to reduce costs and burdens for British businesses and charities and remove barriers to international trade. The Bill is wide-reaching and includes (amongst other things) new general data protection provisions, covering issues such as lawful processing grounds (including a non-exhaustive list of legitimate interests), individuals’ rights, automated decision-making, obligations on controllers and processors, and changes to regulatory enforcement powers. No date has yet been announced for the Bill’s second reading; we will keep you updated on its progress.
Read the government’s press release and the Bill.
Government supports extension of AE
The DWP has announced that it will support a Private Members’ Bill extending auto-enrolment (AE) requirements. The Bill would abolish the Lower Earnings Limit for contributions and reduce the age for being automatically enrolled from 22 to 18 years old. The Bill would not result in any immediate change but would give the Secretary of State powers to make the changes through regulations, which would require consultation. The Bill is currently progressing through the House of Commons (it will reach Committee stage on 15 March).
Read the DWP press release and the Bill.
Technical changes to PPF and FCF regulations
The DWP has published a consultation response and regulations, which come into force on 6 April 2023, making technical changes to the operation of the Pension Protection Fund (PPF) and the Fraud Compensation Fund (FCF). The regulations are in materially the same form as consulted on in July 2022. The changes will allow the Board of the PPF to make an interim payment to cover scheme fees and costs while FCF claims are progressed. This is intended to enable trustees to make recoveries for victims of pension liberation – currently in some circumstances the lack of assets to progress a FCF application has caused claims to stall. The regulations also amend PPF provisions on educational requirements of surviving child dependants, so that a gap between qualifying courses of more than one year (for example where a child dependant takes a gap year) does not result in the loss of PPF compensation.
Read the consultation response and regulations.
High Court: executing a deed ‘in the presence of a witness who attests the signature’
The High Court has given helpful commentary on the requirements for execution of a deed, having been asked to consider whether a guarantee had been correctly executed: Euro Securities & Finance Ltd v Barrett & Ors.
Under the Law of Property (Miscellaneous Provisions) Act 1989, for a deed to be properly executed it must be signed ‘in the presence of a witness who attests the signature’. The judge considered the meaning of signing ‘in the presence of’ a witness’, holding that this required the witness not just to be present (which could include them being asleep or engrossed in watching television) but to ‘observe’, ‘watch’ or ‘see’ the signature being made and to attest it for those reasons. A witness does not need to be familiar with the party’s signature.
The Court also considered what was needed to ‘attest the signature’ (there is no definition of ‘attest’ in the legislation). They held that attestation required the person to observe the act of signing, and then to sign to confirm that the document had been signed in their presence. No particular attestation wording is required; the witness just has to sign in order to attest. It was sufficient that the witness had only signed once under the three signatories’ signatures, for her to have attested all three (she did not have to sign to attest each signature separately). They also held that there was no requirement for the witness to sign in the presence of the people executing the deed, or for them to sign at the same time as the parties to the deed.
Annual GMP increase Order
The Guaranteed Minimum Pensions Increase Order 2023 will come into force on 6 April 2023 and specifies 3% as the rate by which GMPs in payment attributable to earnings factors for tax years 1988/89 to 1996/97 must be increased.
Pensions Academy Online – 28, 29 and 30 March 2023
Pensions Academy is back for 2023. Over three days we will be holding a series of webinars on topical issues for pension schemes and the people who run them:
The new DB Funding Code – outstanding questions and upcoming challenges for pension schemes –Tuesday 28 March, 9:30 – 10:30
Jon Forsyth of LCP will join Andy Cork to discuss practical actuarial and legal issues for defined benefit schemes preparing for the introduction of the new DB funding Code. They will identify key areas of uncertainty and concern and give practical tips on what schemes should be doing to prepare for its arrival.
Pensions in dispute – lessons from the courts and Pensions Ombudsman –
Wednesday 29 March, 9:30 – 10:30
Jason Shaw and Angela Stafford will draw out the most interesting cases and themes from recent pensions decisions, with a focus on those with a practical impact for schemes and lessons that trustees can carry over.
Legal update – what’s changing, now and next – Thursday 30 March, 9:30 – 10:30
With new Codes of Practice, ever-changing reporting requirements and a value for money framework on the horizon, the trustee agenda is full and keeping up to date is a formidable task. Helen Powell and Joan Whybray will help you navigate recent and upcoming developments, highlighting the key things to be aware of and action points to be taking.
If you would like to attend any of the sessions, please sign up here.
The Gender Pensions Gap: what it is and how to fix it – 23 May 2023
The Gender Pensions Gap – the difference between the pension incomes that men and women can expect at retirement – is estimated to be twice the size of the Gender Pay Gap. Why is that, and how can we close the gap? Join us at our offices on Tuesday 23 May 2023 when we will be welcoming Legal & General Investment Management’s (LGIM) Stuart Murphy, Co-Head of DC and Alexandra Miles, Senior DC strategist to discuss the gap and what can be done to address it.