Pensions: what's new this week - 9 October 2023

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 the following topics : DWP General Levy consultation; TPR issues first fine for climate change reporting failure; Guide on biodiversity and nature-related risk; ICO consultation on data protection fining guidance.

DWP General Levy consultation

The DWP has published a consultation on proposed changes to the structure and rates of the General Levy. The Levy is paid by registrable occupational and personal pension schemes to cover the cost of certain activities of the Pensions Regulator (TPR), the Pensions Ombudsman, and the Money and Pensions Service. The increased demand on these bodies has led to a growing deficit in funding. The consultation sets out three potential ways forward from April 2024:

  • Continue the current levy rates and structure. This option does not meet the policy intent as the deficit would continue to grow.
  • Retain the current levy structure and increase rates by 6.5% per year for all schemes. Based on current forecasts, this option would eliminate the cumulative deficit by 2030/31. However, it represents significant in-year increases and does not support the policy direction.
  • Increase rates for all schemes by 4% per year and require an additional payment of GBP10,000 from schemes with less than 10,000 members. This is the DWP’s preferred option; it would eliminate the deficit by 2030/31 and supports the government’s drive to push smaller schemes towards consolidation.

The consultation ends on 13 November 2023.

Read the consultation.

TPR issues first fine for climate change reporting failure

TPR has issued its first fine for failure by a scheme to publish its report on trustees’ management and governance of climate-related risks and opportunities (TCFD report). Although the scheme had completed its report in time for the deadline, a faulty URL set up by the scheme’s administrators meant it was not published on a publicly available website. This case highlights the mandatory nature of the fine (up to £5,000 for an individual and £50,000 for a corporate body) where the disclosure requirements are not met.

Read more.

Guide on biodiversity and nature-related risk

The Pensions Management Institute (PMI) has published a guide for pension scheme trustees on managing biodiversity and nature-related risk. The guide gives some background on the issues of reduced biodiversity and nature degradation and explains how these translate into risks for pension schemes; it then sets out some steps trustees can take to begin considering these risks, as well as opportunities in this area.

This guide reflects an increased focus on biodiversity and nature as financial factors. This was also highlighted by the recently published recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), which build on the work of the Task Force on Climate-related Financial Disclosures (TCFD) (read more).

Read the guide.

ICO consultation on data protection fining guidance

The Information Commissioner’s Office (ICO) is consulting on revised guidance on when it will issue fines for breaches of data protection legislation. The draft guidance includes background on the circumstances in which the ICO can issue a fine; an explanation of the circumstances in which the ICO will consider a fine appropriate; and sets out how it will calculate the amount of any fine. The consultation closes on 27 November 2023.

Read the draft guidance.

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