Pensions law trustee update - Q3 2022
Priorities for trustees this quarter are to:
- be aware of the new draft defined benefit funding regulations. These require defined benefit pension schemes to adopt a funding and investment strategy which ensures benefits under the scheme can be provided over the long term. The funding and investment strategy requires that schemes are not reliant upon further employer contributions to provide for accrued liabilities at the point the scheme reaches 'significant maturity';
- understand that the Pensions Regulator (Regulator) and DWP have issued a joint statement providing that if a transfer out cannot proceed as a statutory transfer as a result of the Occupational and Personal Pension Schemes (Conditions for Transfer) Regulations 2021 (Transfer Out Regulations), trustees should consider allowing it as a non-statutory transfer if it is low risk of being a scam; and
- be aware that since 1 June 2022, trustees with members who want to transfer or access defined contribution or cash balance benefits are subject to the 'stronger nudge' requirements.
In addition, trustees should be aware that:
- the obligations for trustees to tender for fiduciary management services and set objectives for investment consultants will be put onto a statutory footing;
- TPR has issued guidance emphasising the importance of trustees taking steps to ensure their data is dashboard ready now, regardless of their staging date; and
- schemes that are already subject to TCFD governance requirements, or will be from 1 October 2022, will need to update their compliance arrangements to reflect a new requirement to calculate and disclose a Paris Agreement portfolio alignment metric from 1 October 2022.