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Pensions Matter at Pinsent Masons: August 2018

Monthly update from the Pinsent Masons Pensions team.

Select a topic to read more:


Court of Appeal overturns trustees’ rule amendment in British Airways case

British Airways v Airways Pension Scheme Trustee (Court of Appeal)

The Court of Appeal has ruled that the trustees of the British Airways pension scheme acted improperly when they used the amendment power to award augmentations to retired members.  The trustees amended the scheme to compensate members when the basis of the calculation of pension increases was changed from RPI to the less generous CPI.  The Court said that it was not the trustees’ constitutional function under the scheme rules to take on responsibility for scheme design, or to remodel the balance of powers between trustees and employer.  The Court noted that the scheme was in deficit and the employer would be obliged to make higher contributions to fund the additional benefits decided upon by the trustees.  The Trustee has been granted permission to appeal to the Supreme Court and is currently considering its next steps.


Pensions Ombudsman publishes signposting wording for members

The Pensions Ombudsman has published template wording for schemes to use when describing the Pensions Ombudsman’s services to members. This wording is designed to provide consistent signposting now that the Pensions Ombudsman deals with the resolution of all pensions disputes (previously also handled by The Pensions Advisory Service), and has reached an agreement with the Financial Ombudsman Service to co-operate and exchange information.  Schemes should include template wording in communications to members and member booklets and on scheme websites – please contact us or the Pensions Ombudsman for the templates.

Ban on pensions cold calling

The government has published draft regulations to outlaw cold calling in relation to pensions.  Pensions cold calling will be banned unless the caller is regulated by the FCA or the Pensions Regulator.  Also, the caller must have an existing relationship with the customer (such that the customer envisages receiving unsolicited direct marketing calls in relation to pensions) or, alternatively, the customer must have consented to these calls. The Information Commissioner’s Office would be responsible for overseeing compliance with the ban, with powers to fine companies in breach up to £500,000.  The Treasury intends to lay final regulations before Parliament in autumn 2018.

TPR code of practice on master trusts

The Pensions Regulator has responded to its consultation on the code of practice for master trusts and the procedure it will follow when deciding whether to authorise them.  The application period for master trusts wishing to apply for authorisation begins in October, but ahead of this the Regulator is participating in "readiness reviews" (up to the end of August) to help master trusts prepare for authorisation.  The Regulator expects to publish some checklists and feedback on the broad themes emerging from readiness reviews, to help schemes before they apply for authorisation.  There will be a further consultation on guidance about supervision and enforcement of the new master trust regime.

High Court: closed scheme with final salary link is a “frozen” scheme

G4S plc v G4S Trustees Ltd and another (High Court)

A pension scheme operated by G4S is a "frozen" scheme where the employers are no longer at risk of triggering employer debts on ceasing to employer any active members, the High Court has ruled.  The scheme was closed to future accrual but members retained a final salary link for the purpose of calculating their benefits.  The court decided the members had ceased to be in pensionable service because they were not in service which qualified them for further pension or other benefits – the final salary link simply quantified the benefits the members had already earned.  This judgment resolves an area of uncertainty for employers whose closed schemes retain a final salary link.

CMA market investigation – investment consultancy and fiduciary management

The Competition and Markets Authority (CMA) has published a provisional decision in its investigation into the investment consultancy market.   It proposes a number of changes, including mandatory tendering when pension scheme trustees purchase fiduciary management services and using a set of common standards in investment performance reports by investment consultants and fiduciary management firms.  The CMA also wants trustees to set objectives when they hire an investment consultant, so that they can judge the quality of the service.  The CMA is consulting on its findings during August and expects to publish its final decision by 13 March 2019.

European Court rules UK law must change its treatment of transgender people

MB v Secretary of State for Work and Pensions (CJEU)

The Court of Justice of the European Union has decided that the UK cannot require a transgender woman to divorce before she can claim a woman’s state pension.  The case relates to a woman who was previously a man and who remains married to a woman after her gender reassignment.  The couple do not wish to divorce.  The European Court decided that the UK's approach breached European law prohibiting discrimination in the payment of social security benefits, including pensions.  Discrimination occurred because those born female did not have to end their marriage before claiming a woman’s state pension.

PPF consults on rule changes to tackle transferred in benefits

The PPF is consulting on rule changes in the wake of a High Court judgment which requires it to apply the compensation cap separately for a member’s transferred-in pension and main scheme pension.  The judgment in Beaton v PPF could result in higher PPF compensation being payable to a member with transferred-in benefits, and could also result in reduced survivors’ benefits, indexation and revaluation being paid where these are derived from transferred-in benefits.  Although the PPF’s appeal is scheduled to be heard in February 2019, the proposed changes to the PPF’s rules would allow it to continue to apply one cap to both transferred-in benefits and benefits attributable to service in the scheme.

Future of pensions dashboard under review

The future of the pensions dashboard appears more doubtful after pensions minister Guy Opperman refused to confirm to the Commons Work and Pensions Committee that the project would go ahead.  The dashboard is intended to provide a single platform for state and private pension information.  Mr Opperman confirmed that the government had been carrying out a feasibility study and a decision would be made after that has been reviewed - he insisted that he could not comment further.  His remarks followed press speculation that Work and Pensions Secretary Esther McVey is considering abandoning the dashboard.  Meanwhile, a petition (set up by campaign group 38 degrees) calling upon Esther McVey to continue to roll out the dashboard by 2019 has attracted over 92,000 signatures.

Work and Pensions Committee in favour of CDC schemes

The Commons Work and Pensions committee has published a report urging the government to act swiftly to facilitate collective defined contribution (CDC) pension schemes.  The Committee recommends the government introduce reforms and regulations to enable the introduction of CDC schemes, following the agreement reached between Royal Mail and the CWU trade union to pursue a CDC scheme for all Royal Mail employees.  The Committee considers CDC schemes have the potential to reconcile the competing aspirations of freedom and choice and security for individuals saving for a pension, and also have the promise of sustaining and reviving the provision of company pensions.



And finally…

One of Britain’s oldest nurses says she has no plans to retire after 49 years working in the NHS – even at the age of 81.  Maureen Horton from Sheffield began her career as a mental health nurse in 1969 and still works for 20 hours a week in the community, treating around 10 patients in a typical shift, reports Metro.  She tried to retire in 1997 but only lasted seven days before she was keen to be back at work.

Pensions Matter @ Pinsent Masons

Pensions matter to us because they matter to you. As one of the largest dedicated pensions teams in the UK, we are embedded in the pensions industry - but we understand that the value of that lies in our ability to simplify complexity and deliver practical solutions for you and for scheme members. We hope that you enjoy this update, and welcome your feedback.

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