Pensions news

Week ending 17 May 2019

DB funding code delayed

In a blog by David Fairs, the Pensions Regulator’s executive director of regulatory policy, analysis and advice, two consultations on DB funding were announced. The first, due this summer, will focus on options for a clearer framework for DB funding. The second consultation on the new DB funding code itself is now not planned until next year, once TPR has more clarity on the intended primary and secondary legislative package. TPR also confirmed that it does not intend to pursue a ‘one size fits all’ funding framework and that the flexibilities in the current funding regime will remain to help trustees and employers reach balanced outcomes.

Suits you, sir?

The DWP has published a tailored review of the Pensions Regulator, finding that “the Regulator is a well-run organisation that effectively carries out its statutory objectives”. A point in the Regulator’s favour was the successful implementation of autoenrolment. The review makes 16 recommendations for future improvement, including:

  • the DWP should consider the benefits of extending TPR’s powers to enable it to make rules in specific circumstances
  • TPR should assess whether the codes of practice it measures schemes against are the correct minimum standards of compliance they expect of all schemes
  • TPR should seek improved methods of gathering data to monitor schemes, in order to decrease the regulatory burden on schemes and employers.

John Lewis throws in the towel

The John Lewis Partnership has announced plans to close the DB section of its pension scheme to future accrual from April 2020, after a year long review and consultation. All members, including the 44,000 current active members in the DB section, will have access to an improved DC section with matching contributions of up to 8% of pay and an additional 4% after three years’ service, regardless of whether a member pays into the scheme or not.

Invalid increases

The Court of Appeal has overturned a previous High Court decision about pension increases, granted in 1991 by the Trustees of the BIC UK Pension Scheme, for members’ benefits accrued between 1992 and 1997. It found that the required process for granting increases had not been followed in 1991 and a deed introduced in 1993 did not validate the increases, as the trustees had contended. This means that around £5 million of overpayments will need to be recouped from members, by reducing future pension payments.