At a glance...
Issues affecting all schemes
COVID-19
Contribution payment failure period to return to 90 days
PLSA VOTE REPORTING TEMPLATES
The PLSA has published vote reporting templates to assist with implementation statements
INVESTMENT LOSS CAUSED BY TRANSFER DELAY
The Pensions Ombudsman awards significant compensation
PENSION SCHEMES BILL UPDATE
Second reading in the House of Commons to take place on 7 October 2020 NORMAL MINIMUM PENSION
NORMAL MINIMUM PENSION AGE INCREASE
Confirmation that normal minimum pension age to rise from 55 to 57 in 2028
COLD-CALLING PENALTY
The Information Commissioner's Office issues a substantial penalty for pensions cold-calling
STATE PENSION AGE CHALLENGE REJECTED
The Court of Appeal dismisses "Backto60" campaigners' appeal
Issues affecting DB schemes
2021/22 PPF LEVY DETERMINATION CONSULTATION
The PPF has published its draft levy determination for the 2021/22 levy year
Issues affecting all schemes
Coronavirus (COVID-19) - contribution payment failure period reverts to 90 days
The Pensions Regulator has updated its guidance on reporting duties and enforcement activity during COVID-19 to say that from 1 January 2021 pension scheme providers and trustees should revert to reporting payment failures that are 90 days outstanding, rather than 150 days.
Action
Trustees and administrators need to take note of this and ensure that, where any processes were amended to reflect the reporting flexibility granted, those processes revert to their previous state from 1 January 2021.
PLSA publishes vote reporting templates
The Pensions and Lifetime Savings Association (PLSA) has published vote reporting templates to help pension schemes meet their stewardship duties. These templates accompany guidance issued by the PLSA in July 2020.
From 1 October 2020, implementation statements are required to be included in schemes' annual reports and accounts. The implementation statement must, amongst other things, describe the voting behaviour by, or on behalf of, the trustees during the scheme year, and must state where any proxy voter services have been used.
The PLSA has published two sets of templates and guidance - one for use by pension schemes, and one for use by their underlying investment managers. This is with the aim of achieving consistent and uniform reporting of the required information.
Action
Trustees may want to use the PLSA guidance and templates when producing implementation statements.
Investment loss caused by transfer delay
The Pensions Ombudsman has awarded a member substantial compensation for investment losses in connection with a delayed transfer, following a successful appeal by the member to the High Court.
The member had applied for a transfer-out in March 2016. He had made it clear that that the transfer needed to be made before 23 June 2016, the date of the Brexit referendum. However, the transfer was not made until well after that date.
The member complained that there has been undue delay by the administrator, and that as a result he had lost the opportunity to invest in the stock markets immediately following the referendum.
The Ombudsman originally considered the case in June 2018. He found that there had been maladministration by the administrator. However, he held that the investment loss claimed by the member was not measurable and had not been reasonably foreseeable by the parties at the time. Accordingly the Ombudsman awarded compensation only for distress and inconvenience (£2,000).
The member appealed to the High Court. The High Court held that:
- Where a member applies to transfer, it is obvious that the transferred moneys are to be invested, and that a delay may result in loss (including a loss attributable to any spikes in the stockmarket). Accordingly the test of reasonable foreseeability had been met.
- Whilst there might be difficulties in precisely measuring loss (and care should be taken not to do so with the benefit of hindsight), this did not mean that the loss was irrecoverable.
The Court referred the matter back to the Ombudsman so that the member's loss could be determined. Applying principles laid down by the Court, the Ombudsman concluded that the member would have invested £250,000 in the FTSE 100 Index immediately after the leave vote, and would thereby have made a gain of about £43,700. The Ombudsman therefore directed the administrator to pay the member £43,700 plus interest at the rate of 8% from the date when the compensation should have been paid.
Mr T (CAS-38354-V5L8)
Action
Trustees should note this significant decision and review their transfer processes as necessary. Particular care will need to be taken where a member says he/she wishes a transfer to be completed by a specific date.
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Originally published September 2020
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