Issues affecting all schemes
Pensions Ombudsman – Early Resolution Service
The Pensions Ombudsman has published a factsheet on its Early Resolution Service (ERS). The factsheet covers points including the following:
- The ERS is intended to be used for complaints that the Ombudsman believes can be resolved informally through consent and cooperation rather than a formal opinion by an Adjudicator or determination by the Ombudsman.
- Use of the ERS is voluntary and all the parties to a complaint must agree for it to be used.
- Complaints will be transferred to the Adjudication Team if the parties cannot agree a resolution or if one party says that it no longer wishes to use the ERS.
- If a complaint that has gone through the ERS is subsequently considered by the Adjudication Team/the Ombudsman, they will consider the complaint afresh and will not automatically follow any view expressed by a caseworker during the ERS.
- The ERS does not have any legal powers to determine complaints or make directions against parties – instead, complaints are resolved by mutual agreement between the parties.
Action
No action required, but trustees, employers and administrators may find the factsheet helpful.
Issues affecting DB schemes
Pensions Regulator – annual funding statement
The Pensions Regulator has published its 2022 annual funding statement which is targeted at schemes undergoing valuations with effective dates between 22 September 2021 and 21 September 2022. It is also relevant to schemes on a more general basis by highlighting risk management practices, regulatory developments and current issues.
The statement emphasises that schemes currently undergoing valuations are doing so in a period of high inflation, high energy prices, higher interest rates and slower economic growth, all of which may impact scheme assets and liabilities and the employer covenant. Trustees need to be alert to the possibility of their scheme's funding position, investments and employer covenant being more volatile and potentially changing quickly. It is important for trustees to understand the key risks to their scheme and the effectiveness of their strategies to manage them. The statement includes tables setting out, for each of 10 covenant categories, the key risks the Regulator expects trustees and employers to focus on, and actions to take, depending on the scheme's funding strength, maturity, and employer covenant strength.
For more information, please see our legal update.
Action
Trustees and employers of schemes that are currently undergoing a valuation or are reviewing their funding strategy should review the statement and take it into account in their funding discussions. Trustees and employers of other schemes should also review the more general messages in the statement around risk management practices, regulatory developments and current issues.
Guaranteed minimum pensions – conversion
An Act designed to clarify the legislation on guaranteed minimum pension (GMP) conversion has received Royal Assent. In particular, the Act replaces the provisions in the current conversion legislation on minimum post-conversion survivors' benefits and obtaining employer consent.
In order for the changes to have effect, the government will need to:
- Bring the changes into force.
- Make regulations setting out, among other things, the conditions that the minimum post-conversion survivors' benefits must meet and which persons (if any) must consent to the conversion.
The government has not provided a timetable for these actions.
Action
Trustees and employers who are interested in GMP conversion should keep the implementation of the Act under review.
To read the full article click here
Originally Published April 2022
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2021. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
