December is traditionally a time for looking back on the year that has passed. 2018 was a busy year for the world of pensions as my colleague Neil Copeland reflected on in his end of year blog. But December is over, the trees and tinsel have been put away for another year (or 8 months if you are a retailer). We are in January 2019, a fresh new year and we can boldly look forward. To what though? What is on the near and distant horizons for trustees to look forward to? Well, this year we actually have a fair idea of what 2019 has in store. Let’s look at some of the changes we think will come about and that Trustees should be aware of.
It is hard to escape from one word that has been overused in the last 2 years. Brexit. Whilst it is not unreasonable to say that the uncertainty around Brexit makes it difficult to know what the ultimate outcome will be, it is clear that Trustees need to understand the various outcomes and what those might mean for their Schemes. This is a subject we have written a number of blogs about and you can find these here. Safe to say that Brexit is a risk for pension schemes and Trustees should record that risk and make contingency plans to deal with it – whatever the outcome eventually is.
But first January has got some key dates coming up and, at last, the pensions cold calling ban comes into force on 9 January 2019. Anyone breaching this new legislation could be on for a hefty fine of up to £500,000. Will it stop pensions scams completely? No, but the message for your members is clear – a cold call about you pension is likely to be a scam. Just hang up the phone.
Not much further into January is the implementation of IORP II which governments have to have in place on 13 January 2019. IORP II brings in extensive new requirements on governance and communications. Talk about a fast start to the year!
In the Budget in 2018 we found out that there is going to be a Pensions Bill sometime in 2019 with the summer being the likely time for publication. From all the broad hints, this bill is likely to cover
- Reforms on the regulation of funding of DB schemes.
- New provisions applying in corporate transactions, including a requirement for the seller to provide trustees with a “declaration of intent” about their plans for the scheme
- New powers for the Pensions Regulator including powers to levy criminal and civil fines, new anti avoidance powers and powers to -gather information. This enhances their mission statement of being clearer, tougher and quicker.
- Provisions for the consolidation of DB schemes.
- Provisions on new Collective DC (CDC) schemes.
- Changes to the powers of the Pensions Ombudsman
We can look forward to the Pensions Regulator issuing a consultation on a revised DB funding code of practice. This was telegraphed by DWP in mid 2018 and we can expect the consultation possibly in the first quarter of this year. As well as this trustees of DB and DC will have to remember to implement new requirement for their statements of investment principles (SIP) for environmental, social and governance considerations. If your SIP is due on or after 1 October 2019 then this has to be a factor.
Auto-enrolment (AE) and Master Trusts are impacted this year with increases to minimum contributions for AE and Master Trusts having to meet the authorisation criteria.
There is more including a number of interesting court cases that cover subjects like equality of normal retirement dates, the operation of amendment powers, recovery of overpayments and so forth.
As we get more detail on these subjects, and indeed the ones we find out about, we will write more blogs and notes to help explain what is happening and what it means for you as trustees and your schemes.
2019 will not be quiet and I fear that December 2019’s retrospective look back at the year might be our longest blog yet!