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What's New in GPT

Welcome to the latest updated version of The Guide for Pension Trustees – November 2018

The Guide for Pension Trustees aims to keep its readers up to date with changes in legislation and regulation, and with developments in practice, that affect pension trustees and others concerned in the management of pensions.

The resumption of workloads following the end of the summer holidays has brought a number of developments in the pensions area. Although the prime political focus is on Brexit, there are developments in the pensions regulatory sphere that trustees should be aware of. Interestingly, there is also an important judgment of the Court of Justice of the European Union (CJEU – formerly the ECJ) that is likely to affect schemes and members going forward, regardless of the outcome of the Brexit negotiations.

New TPR approach to workplace pensions regulation

Previous updates have mentioned aspects of The Pension Regulator’s changing approach to regulating schemes. In a statement issued in September it announced a new regime that will result in an increase in the volume and frequency of its interaction with schemes. Its intention is that potential problems, both in respect of particular schemes and more widely, are more likely to be identified and addressed before they escalate into a problem that impacts the security of members’ benefits. [See 24.1.12 of The Guide] 

Master trust regulation now in force

Now that 1 October has passed and the new regulatory regime for money purchase master trust schemes is in force, further details have emerged, including guidance and details of further penalties for failure to provide specified information to The Regulator. These are potentially very severe, and are consistent with The Regulator’s growing emphasis on the provision of information, without which it feels its ability to regulate effectively is compromised. [See 1.18.5]

Tighter FCA regime for transfer advice

There are already tight rules concerning the provision of relevant financial advice to members with DB benefits who wish to transfer those benefits to another arrangement – particularly where the transfer will involve converting those benefits to DC. There have been concerns expressed that members who request transfers on that basis are not always adequately advised in a way that they can readily understand of the consequences of giving up the DB protection.

The Financial Conduct Authority, which regulates financial advisers, has been conducting consultation on possible strengthening of that regulation. It has now introduced new regulations as a result. These involve new qualification requirements for advisers, together with more detailed interaction with the member. If the concerns behind these changes prove to have been valid, trustees of DB schemes may see a reduction over time in the number of member requests for transfers that proceed. [See 17.4.1 (Note)]

The CJEU is not done with the UK yet!

Despite the political wrangling over the terms of Brexit, the UK remains for now at least subject to the business-as-usual terms of a full EU member state. In September the Court of Justice of the European Union gave a Determination in the case of Grenville Hampshire v PPF, which has implications not only for the Pension Protection Fund and the Financial Assistance Scheme, but also potentially for workplace scheme trustees.

The case concerned whether the benefits payable by the PPF in all circumstances, set by legislation, comply with overriding EU requirements. The CJEU found that not only was the PPF subject to the Insolvency Directive, but that in some circumstances its compensation levels could fall below the level required by the Directive to be provided following a sponsoring employer’s insolvency (50% of accrued retirement benefit).

The Government is now considering how to address the potential for shortfalls. Meanwhile, it seems that the Determination also applies to schemes themselves, which means that trustees of schemes with an insolvent sponsoring employer will need to obtain legal advice on what the case might mean for them. [See 16.10.10]

I hope you find the updates useful.

Kevin LeGrand

If you have any questions about this Update, please contact the Helpdesk on 0800 980 1332, or email

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