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Issues affecting all schemes

Pensions Regulator powers - enforcement approach

The Pensions Regulator (the Regulator) is consulting on its approach to the new powers introduced by the Pension Schemes Act 2021 and their interaction with its existing powers. (These new powers came into force on 1 October.) The consultation covers three draft policies which explain the Regulator's approach to three areas as follows:

  • Overlapping powers policy - where the Regulator has the option to pursue both criminal and/or regulatory powers in respect of the same set of circumstances.
  • Monetary penalty powers policy - the Regulator's new powers to impose high fines for information-gathering and avoidance-related scenarios.
  • Information-gathering powers policy - the use of section 72 notices, interviews and inspections in the context of the Regulator's enforcement cases, including its approach to the new fixed and escalating penalty powers for non-compliance.

The consultation closes on 22 December.

Action

Trustees and employers should keep the progress of the consultation under review. As the Regulator's new powers are now in force, trustees and employers should also take advice on them if any corporate transaction or reorganisation which affects the employer covenant is planned.

Data protection - proposed regime reform

The government is consulting on proposed changes to the UK's data protection regime. The changes would see the UK deviate from the requirements under the EU General Data Protection Regulation and would loosen restrictions on the use of data in the UK. Changes that would affect trustees of occupational pension schemes include removal of the requirements to:

  • Designate a data protection officer.
  • Conduct data protection impact assessments.
  • Meet certain data mapping and record keeping obligations.
  • Inform the Information Commissioner's Office of personal data breaches where the risk to data subjects is "not material".

The consultation closes on 19 November. For more information, please see our legal update.

Action

Trustees, administrators and employers should keep the progress of the consultation under review.

Issues affecting DB schemes

Notifiable events - proposed changes

The government is consulting on regulations that:

  • Make changes to the list of employer notifi­able events.
  • Prescribe the events affecting a DB scheme employer in respect of which a notice and accompanying statement (often referred to as a "declaration of intent") must be given to the Pensions Regulator and the scheme trustees.

The consultation closes on 27 October, and the draft regulations are intended to come into force on 6 April 2022. For more information, please see our legal update.

Action

Employers and trustees of DB schemes should keep the progress of the consultation under review. Employers should be aware that the regulations as currently drafted would require them to report certain transactions and reorganisations to the Pensions Regulator

Pension Protection Fund - 2022/23 levy

The Pension Protection Fund (PPF) is consulting on the draft rules for the 2022/23 levy. The PPF intends to set the 2022/23 levy estimate at £415 million, £105 million less than in 2021/22. This means that around 82% of schemes that pay the risk-based levy will see a reduction in their levy.

Very limited changes are proposed to the levy rules. The key changes include the following:

  • The PPF valuation basis is being changed following introduction of updated guidance on the assumptions to be used in PPF valua­tions. This is expected to reduce the levy for 99% of schemes.
  • The previously separate levy rules on com­mercial consolidators and schemes without a substantive sponsor are being combined into a single appendix, widening the definition so that all schemes without a conventional spon­sorship structure can be treated consistently.

The consultation closes on 9 November.

Action

Employers and trustees of DB schemes should keep the progress of the consultation under review.

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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.