Integrity • Clarity • Simplicity

April 2020 to June 2020

Supporting you to improve governance and stay on top of the ever-changing technical issues in the pensions industry.

Regulatory update

Integrity • Clarity • Simplicity 1

APRIL 2020 TO JUNE 2020

For action/discussion with your advisers and/or administrator

New Issues – TPR blog on administration

New Issues – Corporate Insolvency and Governance Act 2020 gains Royal Assent

New Issues – TPR issues updates on easements

New Issues – TPR updates COVID-19 guidance suite

New Issues – Update on CMA Order timing requirements

TPR blog on transfers and scams

TPR guidance on closure of funds

Updated TPR DC Coronavirus guidance

TPR 2020 Annual Funding Statement

TPR guidance on communicating to members during COVID-19

Updated TPR guidance on DC scheme management and investment

FCA expectations for wet-ink signatures in light of Coronavirus

New TPR Coronavirus guidance on scheme administration

FCA updated guidance on Coronavirus

Integrity • Clarity • Simplicity 2

APRIL 2020 TO JUNE 2020

For monitoring

New Issues – FCA consultation and review on value for money

New Issues – Consultation on charge cap review and cost disclosure

New Issues – TPR launches interim regulatory regime for Superfunds

New Issues – COVID-19: Guidance on pension scheme financial reports and audit

PLSA climate change forum

Corporate Insolvency and Governance Bill 2019-21

PLSA launches industry group on ESG duties

PPF statement on COVID-19 impact on levy payers

Progress on professional trustee accreditation

ICO regulatory approach during the Coronavirus pandemic

ESMA report on central clearing solutions for pension scheme arrangements

For information

New Issues – PLSA guide: GMP equalisation made simple

New Issues – MAPS and dashboards update

New Issues – CTI launches additional tools and guidance for institutional investors

New Issues – PPI updates Pensions Primer

Pensions bodies’ Coronavirus guide for pension savers

PLSA chair’s statement template

TPR blog on DB funding code

PPI briefing note: the pensions implications of COVID-19

TPR blog on protecting savers

Scams guidance from TPR and the PPF

Guidance on good practice for virtual board and committee meetings and new legislation on AGMs

Integrity • Clarity • Simplicity 3

APRIL 2020 TO JUNE 2020

New Issues – TPR blog on administration

TPR released a blog on 23 June 2020 focussed on the importance of pension scheme administration. It notes that “administration is an absolute core function in a pension scheme” and refers to its plans to “build stronger relationships with a number of strategically important administrators”, sharing best practice and aiming to drive up standards. It also encourages trustees and scheme managers, in light of the impact of Coronavirus, to “continue to be pragmatic and supportive to ensure administrators can keep delivering priority activities without ‘burning out’. Expectations about how quickly administrators may be able to return to discretionary work must be realistic and consider the impact of both a spike in workload and challenges in addressing it”. For more information: https://blog.thepensionsregulator.gov.uk/2020/06/23/paying-benefits-is-not-just-admin/?_ga=2.217164182.1447336006.1593429249-1800582569.1588231134

New Issues – Corporate Insolvency and Governance Act 2020 gains Royal Assent

The Corporate Insolvency and Governance Act 2020 gained Royal Assent on 25 June 2020. The Act is designed to “help UK companies and other similar entities by easing the burden on businesses and helping them avoid insolvency during this period of economic uncertainty”, by introducing new flexibilities into the insolvency regime, including the introduction of a new moratorium, intended to allow companies “breathing space” to explore options for rescue whilst supplies are protected. The final version of the Act includes amendments which are intended to address some of the concerns raised in relation to its impact on pension schemes. Broadly, the changes aim to ensure that, where appropriate:

• TPR and the PPF will be notified that a moratorium has come into force or been extended;

• the PPF will have the same rights as the trustees (as creditors) to challenge decisions made by the monitor during a moratorium;

• TPR and the PPF are provided with the same information as creditors in relation to a proposed restructuring plan.

The Secretary of State is also given a power, by regulations, to allow the PPF to exercise any rights that can be exercised by a scheme’s trustees as creditors in relation to a restructuring plan. For more information: http://www.legislation.gov.uk/ukpga/2020/12/contents/enacted/data.htm

Integrity • Clarity • Simplicity 4

APRIL 2020 TO JUNE 2020

New Issues – TPR issues updates on easements

On 16 June 2020, TPR issued updated guidance on reporting duties and enforcement activity. The updated guidance outlines how TPR is “continuing to support schemes in these challenging times.” Decisions on regulatory action will continue to be made on a case-by-case basis and taking “a flexible and pragmatic approach where breaches are COVID-19 related”. However, from 1 July 2020, the guidance asks trustees to resume reporting certain key information to TPR to ensure risks are being managed and savers protected. TPR expects trustees to report details in certain areas, including:

• suspended or reduced contributions – TPR expects trustees to submit a revised recovery plan or a report of missed contributions;

• late valuations, and where recovery plans are not agreed;

• delays in CETV quotations and payments;

• failure to prepare audited accounts. In relation to other key areas:

• late payments – the one exception to the return to business as usual on reporting. TPR will continue to give DC and automatic enrolment providers 150 days to report late payments of contributions (rather than the usual 90 days). This will be reviewed again at the end of September 2020 (as the results of the 150-day reporting period would not be seen until that time);

• transfers – trustees should continue to issue a template letter to all members requesting a CETV quote and monitor requests for concerning patterns. Trustees who identify unusual or concerning patterns should contact the FCA on DBTransferSchemeInformation@fca.org.uk;

• annual benefit statements – TPR is continuing to take a pragmatic approach to these, accepting that the impact of COVID-19 means schemes need additional time to issue them to members. However, schemes should still “look to” providing members with a timescale as to when they would expect statements to be issued;

• accounts – trustees will be asked to report any failure to prepare audited accounts, but TPR will not be looking to take enforcement action on late accounts signed off by 30 September 2020;

• chair’s statements – the legislation around chair’s statements does not allow discretion in relation to enforcement (although included in the annual report and accounts, chair’s statements can be prepared and signed off separately so that they remain on time). TPR also notes that it does not expect to be reviewing statements before the autumn. Chair’s statements it receives before then (including in relation to master trusts) will be returned unread, but this should not be taken as an indication that the statement in question complies with TPR’s requirements;

• master trusts – from 30 June 2020, master trusts should return to issuing a formal report to notify TPR of all triggering and significant events;

• investment governance – TPR does not expect to take regulatory action if a review of a SIP (or statement in relation to any default arrangement) is not delayed beyond 30 September 2020.

TPR also notes that relationship-managed supervisory activity will continue to focus more on near-term risks, rather than the standard activities in its supervisory cycle during this period. For more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/covid-19-an-update-on-reporting-duties-and-enforcement-activity

Integrity • Clarity • Simplicity 5

APRIL 2020 TO JUNE 2020

New Issues – TPR updates COVID-19 guidance suite

On 16 June 2020, TPR also issued updates to the following COVID-19 guidance:

• DB scheme funding and investment: COVID-19 guidance for trustees – this has been given a “major rewrite” to consolidate previously published guidance, provide an update of TPR’s view of the impact of COVID-19, and to explain how it will continue to adapt its regulatory approach and “provide guidance for trustees dealing with difficult decisions”;

• DB scheme funding: COVID-19 guidance for employers – this has been generally refreshed to ensure it is consistent with the updated trustee guidance;

• Scheme administration: COVID-19 guidance for trustees and public service – the updated version includes additional information on maintaining services for potentially vulnerable members, and on “reducing the burden on administrators.”

For more information (DB scheme funding and investment – trustee guidance): https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/db-scheme-funding-and-investment-covid-19-guidance-for-trustees

For more information (DB scheme funding – employer guidance): https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/db-scheme-funding-covid-19-guidance-for-employers

For more information (Scheme administration – trustee guidance): https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/scheme-administration-covid-19-guidance-for-trustees-and-public-service

New Issues – Update on CMA Order timing requirements

On 2 June 2020, the CMA updated its guidance on the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 (“the Order”), to include details on the process and timing for compliance statements under that Order. The Order implements a package of requirements put into place following the CMA’s investigation, which found that certain features of the markets for investment consultancy and fiduciary management services adversely affect competition in connection with the supply and acquisition of those services to and by pension schemes. The updated guidance sets out timing requirements in respect of different parts of the Order:

• for Part 6 (fiduciary management services – performance information provision requirements), fiduciary management providers must submit a compliance statement by 8 July 2020;

• for Parts 3, 4, 5, 7 and 8, pension scheme trustees (amongst others) must submit a compliance statement to the CMA by 7 January 2021.

DWP regulations, which were designed to integrate the Order into pensions law and to transfer responsibility for enforcement from the CMA to TPR, were due to come into force on 6 April 2020. However, their publication has been delayed due to COVID-19. Until they come into force, the Order continues to apply, meaning that trustees need to report any non-compliance to the CMA. For more information: https://www.gov.uk/cma-cases/investment-consultants-market-investigation

Integrity • Clarity • Simplicity 6

APRIL 2020 TO JUNE 2020

TPR blog on transfers and scams

TPR published a blog on 26 May 2020 focused on pension transfers and scams, in light of the Coronavirus pandemic. The blog brings together TPR’s previous guidance on the topic, for example on DC transfers being core financial transactions, communicating to members, including the template letter to be sent to members on requesting a transfer and easements for timing of transfers – noting that this is not a “blanket pause”, if trustees can process the requests, they should do so, and they should get advice before taking a decision to delay. For more information: https://blog.thepensionsregulator.gov.uk/2020/05/26/covid-19-transfer-your-attention/?_ga=2.96111578.794969561.1590512041-541749403.1589448144

TPR guidance on closure of funds

On 21 May 2020, TPR updated its DC scheme management and investment: COVID-19 guidance for trustees, to include a new section on when the temporary closure of investment funds creates a default arrangement. The guidance confirms that, where trustees have redirected scheme contributions into alternative funds following a fund being temporarily closed (or “gated”), this could result in the alternative funds becoming default arrangements. They would therefore be subject to legal requirements such as the charge cap and the requirement to have a statement of investment principles. Schemes may need to take legal advice to assess whether this is the case. TPR expects schemes that have discovered that they have unintentionally created a default arrangement to “immediately take steps to ensure this arrangement meets the legal requirements”. TPR “will continue to take a pragmatic approach to decide whether it would be appropriate to take action in individual circumstances” but notes that, in the case of chair’s statements, it has “no discretion” and “will continue to impose fines for non-compliance”. For more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/dc-investment-and-transfer-values-covid-19-guidance-for-trustees#7ac60e87c2e94ea6ab8e6e1a4c6d961b

Updated TPR DC Coronavirus guidance

On 13 May 2020, TPR updated its DC scheme management and investment: COVID-19 guidance for trustees. The main change was to introduce a new section on member transfers, which clarifies that TPR sees DC transfers as core financial transactions, and therefore expects DC schemes to prioritise them. TPR states that it is “very important to process transfers within a reasonable timeframe”. It also includes a section on scam threats, highlighting that schemes should undertake due diligence on proposed transfers. This guidance applies to DC benefits in hybrid schemes, but it notes that those schemes will need to consider how “members with both DB and DC benefits will be affected if a temporary transfer suspension is applied to the DB benefits”. For more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/dc-investment-and-transfer-values-covid-19-guidance-for-trustees

Integrity • Clarity • Simplicity 7

APRIL 2020 TO JUNE 2020

TPR 2020 Annual Funding Statement

On 30 April 2020, TPR published its annual funding statement, primarily aimed at schemes with valuation dates between 22 September 2019 and 21 September 2020 (“Tranche 15”) and schemes undergoing “significant changes that require a review of their funding and risk strategies”. Unsurprisingly, a key focus of the statement is the current pandemic. The statement stresses the need for trustees and employers to work together to manage the impact of COVID-19, balancing deficit recovery and equitable treatment of the scheme with the sustainable growth of the employer. However, TPR does not expect this to be at the expense of pension scheme security; schemes should also still be pursuing a long-term funding target, with suitable short-term modifications to reflect the current economic situation. The approach to risk management largely follows that of previous years, with schemes asked to identify which of 10 broad categories they fall into (taking into account both COVID-19 and Brexit) to identify their key risks and actions. TPR also provides an update on the timing of its revised DB funding code, with the deadline for responding to the first stage of a two-part consultation having been extended until 2 September 2020. This date will be kept under review. TPR confirms that the second stage of the consultation will now be published next year, and that it does not expect the new code to come into force “until late 2021 at the earliest”. For more information: https://www.thepensionsregulator.gov.uk/en/document-library/statements/annual-funding-statement-2020

TPR guidance on communicating to members during COVID-19

On 29 April 2020, TPR published guidance on communicating to members during COVID-19. It is designed to help members avoid making hasty decisions during these uncertain times. The key points to note are:

• the guidance is primarily aimed at trustees, but TPR also expects it to be followed by anyone involved in preparing member communications (e.g. pensions managers and scheme administrators);

• “for the foreseeable future”, TPR is asking trustees to send DB members who request a CETV quote a template letter which sets out points they should consider before making a decision, and where they should go for impartial guidance. The template was prepared jointly by TPR, the FCA and TPAS;

• TPR recognises that trustees may tailor their approach for their situation and members. For more information (guidance): https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/communicating-to-members-during-covid-19

For more information (template letter): https://www.thepensionsregulator.gov.uk/-/media/thepensionsregulator/files/import/pdf/cetv-members-letter.ashx

Integrity • Clarity • Simplicity 8

APRIL 2020 TO JUNE 2020

Updated TPR guidance on DC scheme management and investment

On 17 April 2020, TPR updated its Coronavirus guidance for trustees on DC scheme management and investment. The updates include a new section on employers wanting to reduce contributions to a DC scheme, which references the updated guidance for employers on this point and TPR’s recent easement for employers unable to consult fully in line with the usual requirements. It also adds a section on trustee involvement where an employer requests scheme rule changes to reduce contributions. This states that, if trustees have the sole or shared power to make the change, they will need to make sure that the decision “is in the best interests of the members”. This can include factoring in “the likelihood of the employer being able to continue as a going concern if they continue to pay the current rate of contributions”, but trustees should make sure they “are satisfied that this is a genuine risk and give thought to whether any change should be temporary”. For more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/dc-investment-and-transfer-values-covid-19-guidance-for-trustees

FCA expectations for wet-ink signatures in light of Coronavirus

On 20 April 2020, the FCA set out its expectations of firms when dealing with the need for ‘wet-ink’ signatures (i.e. signing a document by hand using a pen) in light of practical difficulties caused by Coronavirus. In relation to agreements, the guidance clarifies that FCA rules “do not explicitly require wet-ink signatures in agreements, nor do they prevent firms from using electronic signatures in agreements”. It notes that the validity of electronic signatures is a matter of law and recommends that firms take legal advice. It also reminds firms that they must consider any related requirements set out in the FCA’s principles for businesses and general rules. The guidance goes on to confirm that electronic signatures will be accepted for all interactions with the FCA, eg in completing FCA forms. For more information: https://www.fca.org.uk/news/statements/expectations-wet-ink-signatures-coronavirus-restrictions

Integrity • Clarity • Simplicity 9

APRIL 2020 TO JUNE 2020

New TPR Coronavirus guidance on scheme administration

On 2 April 2020, TPR published guidance for trustees and public service pension schemes on scheme administration in light of the Coronavirus pandemic. It states that trustees should work with administrators to make sure they deliver “critical processes”, which include:

• paying members’ benefits;

• retirement processing;

• bereavement services, as well as any administrative functions required to support these;

• any processes needed to ensure benefits are accurate (eg investing contributions for defined contribution schemes).

Trustees should also “work flexibly” with their administrators “to support them in delivering core functions”, which “may include”:

• agreeing changes in operating procedures;

• holding higher than usual amounts in bank accounts;

• reducing the burden on administrators by limiting any non-critical demands and queries. TPR believes that trustees “should allow electronic signatures and documents and encourage other third-party providers to do the same (e.g. fund managers)”. The legal validity of electronic signatures has been endorsed in a recent statement from Government; however given the complexity of the issue, schemes should seek legal advice before taking this route. The guidance also notes that trustees should be “vigilant and make sure members are not rushed into any financial decisions. They might look to transfer their pension during this uncertain time and could be targeted by scammers.” For more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/scheme-administration-covid-19-guidance-for-trustees-and-public-service

FCA updated guidance on Coronavirus

On 3 April 2020, the FCA updated its guidance on Coronavirus to cover issues relating to requirements to provide certain pensions information. The FCA recognises that some firms are “facing challenges” implementing new rules that change both the information given to consumers entering pension drawdown or taking an income for the first time and the annual information given to these customers. The FCA notes that these rules came into effect on 6 April 2020, and so it expects “firms to have implemented or be in the final phases of implementation”. However, the FCA understands that “firms may experience operational challenges in testing and finalising processes, particularly where they are reliant on third parties to complete this work”. Therefore, it appreciates that “a short delay in some firms’ implementation of the rules may be unavoidable”, though it expects firms to implement “as soon as reasonably practicable”. If this is later than 31 May 2020, firms should notify the FCA. For more information: https://www.fca.org.uk/firms/information-firms-coronavirus-covid-19-response#pensions

Integrity • Clarity • Simplicity 10

APRIL 2020 TO JUNE 2020

New Issues – FCA consultation and review on value for money

On 24 June 2020, the FCA published a Consultation Paper on proposals that are “designed to promote value for money for the members of workplace personal pension schemes”. These proposals “aim to make it easier for Independent Governance Committees (“IGCs”) and Governance Advisory Arrangements (“GAAs”) to compare the value for money of pension products and services, enabling them to be more effective in assessing value for pension scheme members”. The FCA also published the findings of its review examining how IGCs and GAAs – which act in the interests of members of workplace personal pension schemes – ensure those members receive value for money. It found that “a number of IGCs are working well to provide value for money for their members. However, a lack of consistency in the way IGCs and GAAs operate means that members of some workplace pension schemes may not be receiving value for money”. As a result of the review, the FCA has sent feedback letters to firms “to ensure they make improvements to the way they work with their IGC or GAA”. For more information (consultation paper): https://www.fca.org.uk/publications/consultation-papers/cp20-9-driving-value-money-pensions

For more information (review): https://www.fca.org.uk/publications/thematic-reviews/tr20-1-effectiveness-independent-governance-committees-and-governance-advisory-arrangements

New Issues – Consultation on charge cap review and cost disclosure

On 25 June 2020, the DWP published a call for evidence seeking views on the effectiveness of costs, charges and transparency measures in protecting pension member outcomes. This Call for Evidence, together with a forthcoming Pension Charges Survey, will inform the Government’s review of the default fund charge cap (a cap, currently set at 0.75%, on member-borne charges associated with scheme and investment administration, which applies to default funds of DC auto-enrolment schemes) (“the Cap”). Potential proposals for revising the Cap include bringing transaction costs and certain life assurance add-ons into scope, lowering its level and restricting the use of flat fee structures for small pots. The DWP is also exploring policy options for increasing the use of the templates developed by the Cost Transparency Initiative (“CTI”) aimed at providing trustees with standardised cost and charges information from asset managers. The Call for Evidence runs until 20 August 2020. The DWP aims to bring forward proposals “later this year”. It also gives an update on its Investment Innovation and Future Consolidation consultation, noting that a consultation response, together with proposals to address this issue, are promised “in the Autumn”. For more information: https://www.gov.uk/government/consultations/review-of-the-default-fund-charge-cap-and-standardised-cost-disclosure/review-of-the-default-fund-charge-cap-and-standardised-cost-disclosure

Integrity • Clarity • Simplicity 11

APRIL 2020 TO JUNE 2020

New Issues – TPR launches interim regulatory regime for Superfunds

On 18 June 2020, TPR launched a new interim regulatory regime for DB consolidator superfunds (and other new models), pending the establishment of a full legislative framework by the DWP. The new guidance, which came into effect immediately, establishes the “high bar” TPR expects new superfunds to meet to ensure both savers and the PPF are adequately protected. The guidance is intended to cover how trustees of a superfund’s pension scheme should approach managing the funding and governance risks associated with this model. It also explains how they will be assessed and regulated. Updates to TPR’s separate guides for trustees and employers contemplating a move to a superfund will follow, but TPR is clear that every such transfer must go through its clearance process. For more information: https://www.thepensionsregulator.gov.uk/en/document-library/regulatory-guidance/db-superfunds

New Issues – COVID-19: Guidance on pension scheme financial reports and audit

New joint guidance on pension scheme reports, financial statements and related matters in the context of the COVID-19 pandemic was published on 2 June 2020 by the ICAEW, the Institute of Chartered Accounts of Scotland (ICAS) and the Pensions Research Accountants Group (PRAG). The guidance “is intended to support pension scheme auditors navigate the additional challenges they are likely to experience as a result of the COVID-19 pandemic”. It covers a range of topics, including:

• responsibilities for reporting to TPR;

• the impact of the COVID-19 pandemic on the control environment of pension schemes;

• trustees’ reports and chair’s statements;

• consideration of “going concern”, and the trustees’ assessment of going concern;

• accounting for scheme investments;

• events after the end of the reporting period;

• audit issues, including sufficiency and documenting of evidence;

• the auditor’s statement on contributions. The guidance should be read alongside existing standards and guidance, as well as any COVID-19-related updates from the FRC and TPR. For more information: https://www.icaew.com/coronavirus/industry-sectors-and-economy/pensions/covid-19-guidance-on-pension-scheme-financial-reports-and-audit?fromSearch=1

Integrity • Clarity • Simplicity 12

APRIL 2020 TO JUNE 2020

PLSA climate change forum

The PLSA announced on 27 May 2020 that it “is inviting pension schemes, the wider financial services industry, the public and stakeholders to give their views on the practical ways the retirement savings sector can address climate risk”. It will lead a series of online roundtables from 12 June “to give pension schemes a structured forum to discuss ideas, solutions and barriers to the pension industry operating in ways which have a positive impact in helping the UK achieve its Paris Climate Agreement commitments”. The PLSA is also inviting interested parties to submit evidence on the following questions:

• how are pension funds currently incorporating climate considerations into their investment approaches?

• what are the biggest practical challenges to effective consideration and implementation of climate-aware investment strategies?

• to what extent will existing industry, policy or regulatory initiatives be effective in overcoming these challenges?

• are there any industry, policy or regulatory initiatives which would support you in consideration of climate risks and opportunities?

Evidence and views can be submitted via the PLSA website until 14 August 2020. For more information: https://www.plsa.co.uk/press-centre/press-releases/article/Open-forum-pension-answer-climate-risk

Corporate Insolvency and Governance Bill 2019-21

On 20 May 2020, the Government published the draft Corporate Insolvency and Governance Bill 2019-21. The Bill is designed to “help UK companies and other similar entities by easing the burden on businesses and helping them avoid insolvency during this period of economic uncertainty”. The Bill has three main sets of measures intended to:

• introduce greater flexibility into the insolvency regime, allowing companies breathing space to explore options for rescue whilst supplies are protected;

• temporarily suspend parts of insolvency law to support directors in continuing to trade through the current emergency without the threat of personal liability, as well as to protect companies from aggressive creditor action;

• provide companies and other bodies with temporary easements on filing requirements and requirements relating to meetings, including AGMs.

These changes may affect the rights of pension scheme trustees where their scheme sponsor is in financial difficulties. For more information: https://publications.parliament.uk/pa/bills/cbill/58-01/0128/20128.pdf

Integrity • Clarity • Simplicity 13

APRIL 2020 TO JUNE 2020

PLSA launches industry group on ESG duties

On 13 May 2020, the PLSA announced the launch of an industry group to “help produce guidance which will support schemes in getting to grips with their new 2020 Environment, Social and Governance (ESG) and stewardship reporting deadlines and duties” (for example, the requirements to publish an “implementation statement” and additional information in schemes’ SIPs). The PLSA initiative “will help schemes get both clear and consistent information from asset managers on their voting behaviour, as well as provide guidance on communicating how they have implemented their responsible investment and stewardship approaches”. The group aims to produce two documents “in time for summer trustee meetings”: first, “a voting behaviour template and ‘pack’ for asset managers to fill out so that trustees can better compare and contrast engagement and voting behaviour, and to make it easier for trustees to produce their own disclosures”, and secondly, “practical, step-by-step guidance for schemes to achieving good practice on their implementation statements and responsible investment communications”. For more information: https://www.plsa.co.uk/Press-Centre/News/Article/PLSA-launches-industry-group-on-ESG-duties-next-steps

PPF statement on COVID-19 impact on levy payers

On 28 April 2020, the PPF published a statement on the impact of COVID-19 on PPF levy payers. The statement is intended to “reassure” levy payers that the pandemic will have a “minimal impact” on the amount of levy the PPF expects to charge this autumn. The rules used to calculate the levy were fixed before the pandemic and, in calculating invoices, the PPF will be using information that was “largely collected before the economic impact of COVID-19 became significant”. The PPF confirms that, as in previous years, the highest levy they will ask an individual scheme to pay will be “0.5 per cent of its liabilities”. It also notes that the PPF is considering “all options” to find ways it can help schemes with the crisis, and will communicate any decisions “before invoicing starts”. For more information: https://www.ppf.co.uk/news/impact-covid-19-our-levy-payers

Progress on professional trustee accreditation

On 27 April 2020, the Association of Professional Pension Trustees (“APPT”) announced that its accreditation process for professional pension trustees is “moving ahead despite the COVID-19 pandemic”, offering provisional accreditation until full accreditation can be assessed. This follows on from the PMI announcing the first fully accredited professional trustee under its accreditation process. For more information: https://appt.org.uk/appt-moves-ahead-with-provisional-accreditation-for-professional-trustees/

Integrity • Clarity • Simplicity 14

APRIL 2020 TO JUNE 2020

ICO regulatory approach during the Coronavirus pandemic

On 15 April 2020, the ICO published a document setting out its regulatory approach during the Coronavirus pandemic. It states that the ICO is “committed to an empathetic and pragmatic approach”. Whilst continuing to recognise the rights and protections granted to people by the law, and taking firm action against those looking to exploit the public health emergency, it will focus its efforts on the most serious challenges and greatest threats to the public, and be flexible in its approach, taking into account the impact of the potential economic or resource burden its actions could place on organisations. The document examines these areas in further detail, noting the ICO’s Regulatory Action Policy and principles it will follow during this period. For more information: https://ico.org.uk/about-the-ico/news-and-events/news-and-blogs/2020/04/how-we-will-regulate-during-coronavirus/

ESMA report on central clearing solutions for pension scheme arrangements

On 2 April 2020, ESMA published a first report for consultation on central clearing solutions for pension scheme arrangements (“PSAs”). Currently, PSAs benefit from a temporary exemption from the clearing obligation. That exemption, under the ‘EMIR refit’ regulation, lasts until 2021, with the possibility of two further one-year extensions. The extension goes “hand in hand” with the objective that “progress is made by the relevant stakeholders” in addressing the challenges to PSAs in clearing their OTC derivative contracts. The report “documents the progress made towards clearing solutions for PSAs” six months on from the entry into force of EMIR refit, including discussion of the different solutions envisaged so far. It also poses questions for public consultation, focused on possible solutions, “in preparation for the second report due in a year’s time and in order to get input from a wide range of stakeholders”. The consultation closes on 15 June 2020. For more information: https://www.esma.europa.eu/sites/default/files/library/esma70-151-2823_esma_report_to_the_european_commission_on_central_clearing_obligations_for_psa_-_no_1.pdf

New Issues – PLSA guide: GMP equalisation made simple

The PLSA has published a guide on “GMP equalisation made simple”. The guide covers “the history, the methods and the roadmap for the future to help trustees prepare for and begin their GMP equalisation project”. For more information: https://www.plsa.co.uk/Portals/0/Documents/Made-Simple-Guides/2020/GMP-equalisation-Made-Simple-June-2020.pdf

Integrity • Clarity • Simplicity 15

APRIL 2020 TO JUNE 2020

New Issues – MAPS and dashboards update

On 22 June 2020, the newly formed Pensions Dashboards Programme (“PDP”), set up by MAPS, launched its website. It announced the start of a period of “informal market engagement with potential suppliers of the digital architecture for the pensions dashboards ecosystem”, to determine the technology requirements before commencing a formal procurement process “later this year”. An industry-wide call for input on data standards (examining the reports on data scope and definitions published in April), will then run throughout July and August. MAPS has also published its corporate plan for 2020/21, outlining the organisation’s strategic priorities (which include “developing and implementing pensions dashboards”), and its immediate response to the Coronavirus outbreak. The plan was due to be published at the beginning of April 2020 but had been delayed to allow a review of how MAPS’ priorities would be “flexed” in response to the pandemic. Its priorities will continue to evolve as the COVID-19 situation unfolds. For more information: https://www.pensionsdashboardsprogramme.org.uk/2020/06/22/pensions-dashboards-programme-harnessing-expertise/

New Issues – CTI launches additional tools and guidance for institutional investors

On 19 June 2020, the Cost Transparency Initiative (“CTI”) published additional resources aimed at helping institutional investors better understand their investment costs. This follows the publication of its framework of tools and guidance in 2019. The CTI framework (a joint initiative between the PLSA, the Investment Association and the LGPS Advisory Board) encourages pension schemes and asset managers to adopt the standards. The new tools and guidance include a new Fiduciary Management Template, and additional reporting fields on the Liability Driven Investments Template. For more information: https://www.plsa.co.uk/Policy-and-Research-Investment-Cost-Transparency-Initiative

New Issues – PPI updates Pensions Primer

The PPI’s “Pensions Primer” gives a detailed description of the current pensions system and “some of the archaeology” of its various layers. It is intended for people wanting to learn about UK pensions policy. The latest version reflects the current position of, and legislated future changes to, the UK pension system as at May 2020. For more information: https://www.pensionspolicyinstitute.org.uk/media/3505/20200610-ppi-pensions-primer-final.pdf

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APRIL 2020 TO JUNE 2020

Pensions bodies’ Coronavirus guide for pension savers

The DWP, FCA, FSCS, MAPS, PPF, TPO and TPR published a joint guide on 26 May 2020 for pension savers on “COVID-19 and your pension”. The guide “outlines all the protections that are in place, and directs savers where they can go to seek free, impartial guidance should they have any further questions”. For more information: https://www.ppf.co.uk/sites/default/files/2020-05/COVID-19-and-your-pension.pdf

PLSA chair’s statement template

On 28 May 2020, the PLSA published a template “to help pension schemes comply with chair’s statement requirements”. It covers the areas on which trustees of relevant schemes are required to report, including:

• investment strategy and governance;

• processing of core financial transactions;

• disclosure of member-borne transaction costs and charges;

• assessment of value for members;

• how trustees have met trustee knowledge and understanding requirements. The template “is designed to be used in conjunction with TPR’s detailed guidance and quick guide”. The PLSA notes that individual schemes will need to consider their own circumstances when meeting the statutory requirements and should continue to consult their own advisers as they produce their statements. For more information: https://www.plsa.co.uk/Portals/0/Documents/Policy-Documents/2020/DC-Chairs-Statement-Drafting-Template-27May20.pdf

TPR blog on DB funding code

On 18 May 2020, TPR released a blog commenting on the first stage of its consultation on the new DB funding code. The blog suggests that TPR will continue with the consultation, despite calls “to rethink or abandon” it based on arguments that it “was written in different, more benign, economic conditions and it is now out of place”. David Fairs, author of the blog, states that he “strongly” disagrees with these arguments and, in fact, “the issues the consultation raises are even more important and relevant in the light of COVID-19”. TPR therefore believes “the principles under consultation still stand”. However, when it consults on where Fast Track guidelines should be set “later next year, it will be essential to have regard to prevailing market conditions and where the majority of the landscape sit at that time”. The blog acknowledges that TPR will revisit the long-term objective, where the consultation was “more specific” on “what the low dependency funding basis (Gilts + 0.25-0.5%) and timing point for reaching that target (duration 12 to 14 years or equivalent measure) might be”. TPR “will review these parameters in light of the change in market conditions”, informed by “further modelling based on a range of economic scenarios”. The blog notes that TPR will continue to review the timing of the consultation (the deadline for responses to which has already been delayed to 2 September 2020 due to Coronavirus) and consider whether a further extension is required. For more information: https://blog.thepensionsregulator.gov.uk/2020/05/18/db-funding-code-its-a-matter-of-principle/?_ga=2.62448491.672024908.1589797197-1800582569.1588231134

Integrity • Clarity • Simplicity 17

APRIL 2020 TO JUNE 2020

PPI briefing note: the pensions implications of COVID-19

On 30 April 2020, the PPI published a briefing note on the impact that COVID-19 “may have on pensions now and in the future”. It explores “likely impacts” in terms of:

• stock market volatility and its effects on DC pot sizes and DB scheme sponsors’ ability to deliver on member promises;

• employment and the Government Job Retention Scheme (GJRS);

• the effects on different age groups. For more information: https://www.pensionspolicyinstitute.org.uk/media/3479/20200430-bn-120-the-pensions-implications-of-covid-19.pdf

TPR blog on protecting savers

On 15 April 2020, TPR published a blog on how “we can protect savers by working together”. The blog refers to guidance from TPR and other regulators on “the heightened risk of members being targeted by scammers during the pandemic”. It also discusses pension transfers, reassuring trustees of DB schemes that “they’ll have the time they need to deal with cash equivalent transfer value (CETV) requests, whether because they need to reassess how transfers are calculated or because they need to prioritise pension and bereavement payments”. It refers to the easement granted for trustees who suspend CETV quotations and states that “now industry must step up and protect savers using every possible means”. TPR also refers to the FCA’s guidance for pensions providers on requirements where savers are looking to access their pensions and “urges” all providers and trustees to use that guidance. For more information: https://blog.thepensionsregulator.gov.uk/2020/04/15/we-can-protect-savers-by-working-together/

Scams guidance from TPR and the PPF

TPR has published updated guidance on avoiding pension scams. The guidance explains how pension scams work and what the warning signs of a scam are. It then goes on to set out steps for trustees, business advisers and employers to take to help avoid pension savers falling for a scam. The advice includes a note that, due to Coronavirus, savers “might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets”. This means they “could be increasingly targeted by scammers attempting to lure them to ‘safe havens’”. If a saver asks about transferring their pension, TPR states that they should be urged to “exercise extreme caution and visit ScamSmart which has specific guidance relating to COVID-19”. Separately, the PPF has issued guidance for its members on how to avoid scams. This includes an explanation of various types of scams, advice on how to spot fraudulent communications and how members can protect themselves. For more information (TPR guidance): https://www.thepensionsregulator.gov.uk/en/pension-scams

For more information (PPF guidance): https://www.ppf.co.uk/news/how-avoid-fraudulent-scams

Integrity • Clarity • Simplicity 18

APRIL 2020 TO JUNE 2020

Guidance on good practice for virtual board and committee meetings and new legislation on AGMs

The Chartered Governance Institute (“ICSA”) has published guidance on “what constitutes good practice in the conduct of virtual board and committee meetings”, which aims to help companies struggling with the impact of COVID-19. The purpose of the guidance is to “offer a brief guide to the practical and legal issues that need consideration, and to offer insight into how virtual meetings can be made as effective as possible”. Key points covered in the guidance are:

• choosing the right technology and communication channel;

• structuring virtual meetings and avoiding complexity;

• the value of preparation;

• establishing ground rules for the meeting;

• clear instructions on accessing the meeting;

• the necessity for good boardroom practices. Separately, the Business Secretary has announced that the Government will introduce legislation to ensure that those companies required by law to hold Annual General Meetings (AGMs) will be able to do so “safely, consistent with the restrictions on movement and gatherings introduced to address the spread of Coronavirus”. Companies will “temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings”. For more information (guidance on meetings): https://www.icsa.org.uk/assets/files/pdfs/guidance/good-practice-for-virtual-board-and-committee-meetings-web1-002(1).pdf

For more information (AGM announcement): https://www.gov.uk/government/news/regulations-temporarily-suspended-to-fast-track-supplies-of-ppe-to-nhs-staff-and-protect-companies-hit-by-covid-19

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