News Roundup
Pensions Scheme Act 2021 and the new code of practice
The Pensions Regulator (TPR) is the body that regulates work-based pension schemes to protect the benefits of Pension scheme members. Following a consultation process, TPR announced new regulatory powers and penalties under the Pension Schemes Act 2021.
This took effect from 1 October 2021 and includes a new policy for TPR to use criminal powers to prosecute those who put savers’ pensions at risk.
Earlier this year, TPR also ran a six-week consultation on changes to its Code of Practice 12. This looked at when and how the regulator should act if an employer’s actions were found to have a materially negative effect on the scheme’s ability to provide benefits. There are now further tests in place in order to monitor these types of circumstances. The Code of Practice 12 explains the role of these tests and how they are implemented.
Environmental social governance (“ESG”) has been growing in importance in the pensions industry with various compliance requirements having been introduced in recent years. The next stage of this development for pension schemes under the new Act is to bring in specific climate change risk management and reporting requirements. The trustees will need to put in place effective governance, strategy, risk management and accompanying metrics in relation to climate risks and opportunities.
You can find more information about these changes and the role of TPR on the TPR website here.
Download a copy of Simply Pensions 2021
Minimum pension age change reminder
Last year the government confirmed that the earliest age for taking a personal pension will be rising from 55 to 57 in 2028.
This will affect you if you were born in 1973 or later and are planning to start taking benefits from age 55. For more information, please get in touch with the Scheme’s Administrators, Mercer. Their contact details are at the bottom of the page.
A reminder about changes to RPI
In the last edition of Simply Pensions we highlighted the changes being made to the way pensions are increased, which was announced by the government last year. Currently, once you stop building up additional pension in the Scheme, it generally increases up to and after retirement in line with inflation (i.e. how much the cost of goods and services increase by in a year). In the UK there are different measures of inflation, and the one that the Rules of the Scheme need to be used for many of the pension increases is the Retail Prices Index (RPI).
The Government and UK Statistics Authority (UKSA) announced that, with effect from February 2030 onwards, increases in the RPI will be aligned with another measure of inflation, the Consumer Prices Index – including owner occupiers’ housing costs (CPIH). Broadly this is expected to result in RPI inflation being 1% lower each year from around 2030 onwards. This means that certain pension increases in the Scheme will be lower from 2030 onwards and therefore pensions will not grow as quickly as they did before.
However, the affected pension increases are still based on a measure of inflation and therefore are designed to ensure your pension can keep pace with the cost of living.
Whilst pensions are expected to be lower (and therefore liabilities), the assets we hold in the Scheme to fund these pensions are also expected to be lower in value, as many of them were linked to RPI inflation. As both assets and liabilities are expected to reduce in value there has been little impact on the Scheme’s funding as a result of this change.
Pension scams
Anyone could be a victim of a pension scam. If you’ve been contacted by someone offering to help you to take your pension benefits before you reach age 55, or promising guaranteed high investment returns if you transfer your Scheme benefits, you may have been contacted by a scammer. A recent surge in pension scams has seen victims lose an average of £91,000.
If you’ve been tempted by an offer to transfer your benefits, it’s crucial that you check it’s legitimate. Once you’ve handed over your savings, it’s too late to act. If you think you may have been scammed check the FCA warning list available at fca.org.uk/scamsmart and report your suspected scammer using the reporting form. If you’ve applied to transfer your benefits out of the Scheme, but are having doubts or are concerned that it could be a scam, please contact Mercer immediately to see if they’re able to stop the transfer before it takes place.
Don’t let it happen to you – It’s your money – never feel rushed or pressured to transfer your pension. Take the time to find out who you’re dealing with and seek impartial advice.
Here are five telltale signs of a pension scam:
1. You’ve been contacted out of the blue, received a cold-call or other unsolicited message about taking your pension benefits
2. You’ve been told you must act fast as the offer is only available for a short period of time
3. You’ve been promised returns that seem too good to be true
4. You’ve been approached by someone claiming to be from Pension Wise, The Money Advice Service or another legitimate sounding organisation
5. The contact details for the organisation they claim to be from are mobile numbers or a PO Box address
For more information, visit the FCA website FCA.org.uk/Scamsmart
Get in touch
For further help and
information contact the
Scheme’s Administrator Mercer