Pensions: Joint DB & DC trustee agenda - October 2023

Welcome to our monthly update on current legal issues for trustees of DB and hybrid pension schemes, designed to help you stay up to date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We also have a separate DC-only briefing. 

Court ruling on amending contracted-outschemes

The High Court has considered the impact of a scheme that was contracted-out on the reference scheme test (RST) basis failing to obtain an actuarial confirmation prior to an amendment (which was a requirement at the relevant time): Virgin Media Ltd v NTL Pension Trustees II and Others.

The judge held that: (i) an amendment was void where it was introduced without the required confirmation; (ii) this applied to amendments to relevant rights already accrued at the time of the amendment and future service rights accrued afterwards; and (iii) the failure to obtain the actuarial confirmation voided all relevant alterations, not only those with an adverse effect (read more).

ACTION: In some circumstances, schemes that were contracted-out on the RST basis may want to consider reviewing evidence of the necessary confirmation for past changes. However, leave to appeal has been granted, so most schemes may prefer to await future developments.

Mansion House reforms

The government published a raft of documents after the Chancellor announced pension reforms as part of his Mansion House speech. The documents included calls for evidence on trustee skills, capability and culture, and options for DB schemes; responses and further consultations on choices in decumulation and the proliferation of small pots; and consultation responses on the new value-for-money framework, extending opportunities for CDC schemes, and DB superfunds (read more).

ACTION: Review / ask for training on the proposals.

Climate scenario analysis NEW

TPR has published a blog post setting out expectations of trustees in using climate scenario analysis, including reviewing the analysis and adding commentary to upcoming reports or in board minutes (read more).

ACTION: Review your climate scenario analysis in light of the guidance and consider whether additional commentary needs to be recorded.

PLSA guidance on pension sharing NEW

The PLSA has revised its guidance on processing pension sharing orders on divorce, setting out updated suggested ranges for amounts that should be charged in different circumstances and a flowchart on when charges can be made (read more).

ACTION: Check your pension sharing processes and charges against the guidance.

Updated TPR guidance on regulated apportionment arrangements (RAAs) NEW

TPR has published updated guidance on RAAs. The new guidance is generally consistent with TPR’s existing approach but is considerably more detailed than the previous publications and includes some strengthening of expectations for approval of an RAA (read more).

ACTION: Take the guidance into account if considering an RAA.

Dashboards update

The Pensions Regulator (TPR) has updated its guidance on dashboards compliance (read more) and the DWP has updated its guidance for schemes that are seeking a deferral of their connection deadline (read more).

ACTION: Continue preparation for pensions dashboards, in line with the guidance.

International data transfers NEW

Schemes that transfer personal data outside the EEA in reliance on standard contractual clauses (SCCs) may need to update their contracts before 21 March 2024. Two new documents replaced the former SCCs and were required to be used for agreements entered into after 21 September 2022. Transitional arrangements in relation to agreements entered into before that date end on 21 March 2024, meaning that such agreements need to be revisited (read more).

ACTION: Make sure any SCCs used by you or your administrator/other third parties are updated.

PASA guidance on DB benefit accuracy NEW

PASA has published guidance aimed at helping DB schemes to ensure benefit accuracy. The guidance sets out suggestions for benefit specifications, data specifications, benefit audit and automation of calculations and processes (read more).

ACTION: Consider the suggested actions.

Updated TPR DB superfunds guidance

TPR has updated its guidance for DB superfunds and for employers and trustees considering a superfund transfer (read more).

ACTION: Consult the updated guidance if you are considering a transfer to a DB superfund.

Watch this space

  • The launch of the new DB funding code and regulatory framework has been postponed to April 2024 (read more).
  • The government has consulted on changes to the notifiable events regime. There is currently no revised date for the delayed regulations (read more).
  • TPR has consulted on its proposed General Code: watch our webinar on the proposals and read TPR’s interim response. Publication of the revised version of the code is expected soon.

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Content Disclaimer
This content was originally published by Allen & Overy before the A&O Shearman merger