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Pension Developments: What's keeping the team busy in 2021

1. Single code of practice

Published on March 17th TPR’s draft new ‘single’ Code of Practice seeks to consolidate and update many (but significantly not all) of the existing codes of practice.

Trustees should be aware that, whilst many of the requirements within the code will likely be included within their existing governance frameworks, the new code does contain significant new requirements.

The most notable of these is the need for trustees to undertake an ‘Own Risk Assessment” (ORA). Based on our initial assessment of TPR’s requirements this will require substantial work to complete. Alongside the ORA are also requirements to disclose remuneration arrangements publicly as well as a focus on administration procedures.

A consultation exercise is already underway and will end on 26 May 2021. The code itself is expected to come into force in early 2022.

The Pegasus team is looking forward to helping both existing and new clients meet the requirements of the new code. For more information contact Chris Keating or visit the TPR website.


Earlier this year the Department for Work and Pensions (DWP) published the draft regulations and guidance on new requirements for the largest DB schemes (over £5bn), master trusts and CDC schemes to comply with TCFD in assessing and reporting climate-related risks. In addition, the DWP has just launched a consultation on social risks and opportunities for pension schemes, focusing on the ‘S’ in ESG.

At LawDeb we believe that the pension industry should be actively involved in the promotion of sustainable practices for the long-term benefit of our scheme members given the long-term nature of pension scheme investing, the magnitude of the combined assets of UK pension schemes and the declaration of climate emergencies.

As trustees, focused on delivering value and promised benefits for members, we do recognise that the costs of complying with the TCFD Framework and the timescales involved will be a challenge for trustee boards.

Our guidance: start working with fund managers now, to set out your own disclosure requirements and drive economies of scale.

Natalie Winterfrost led LawDeb's response to the Consultation, read the full response: In response to the Department for Work and Pensions Consultation on Climate Risk - Law Debenture.

3. New TPR powers

The Pension Schemes Act 2021 has now received Royal Assent. This includes new powers for TPR, including:

  • changes to the contribution notice regime
  • new criminal offences for avoidance of employer debt and conduct risking scheme benefits – the overly wide drafting of these offences was repeatedly debated during the passage of the Bill through Parliament, but no amendments were made – however, TPR is now consulting on its policy on how it will use its new powers to bring criminal prosecutions
  • changes to the notifiable events regime (note that the new notifiable events themselves will be specified in regulations)
  • introduction of new ‘accompanying statement’ (previously called ‘declaration of intent’) providing information about certain notifiable events
  • information-gathering powers including powers to interview any person or to inspect premises as well as the ability to impose new fixed and escalating penalties for failures to provide information

For trustees and sponsoring employers it is essential to be aware of the new regulatory framework and new offences, penalties and information-gathering powers when making scheme decisions.

4. DB funding code

Not much has changed over the last six months as we continue to wait for regulations and the second consultation. TPR’s interim response suggests that we may still have to wait for some time.

The Pension Schemes Act contains the regulatory framework for a new scheme funding regime and TPR has finished an extensive consultation (the first of two) on a new DB funding code.

The new regime will see a greater focus on trustees and employers agreeing long-term objectives for their scheme. For some schemes it could mean a move to a much more prescribed funding approach than at present, while others will need to justify where they wish to continue with a more scheme-specific approach.

Click here to read more about LawDeb’s thinking on the DB funding code.

5. GMP equalisation

The ‘highlight’ of the last six months from a GMP equalisation perspective was the handing down of a further judgment setting out how GMP equalisation should be dealt with in the context of past transfers out, and creating a new GMP equalisation workstream for all contracted-out schemes.

In terms of existing GMP equalisation work, many of the first wave of schemes (usually those on a journey to buy-out) are nearing the completion of GMP equalisation, with 1 April 2021 being a common conversion/equalisation date. For some the journey is only just beginning and the experience of those schemes that were early movers provides valuable lessons for the second wave of schemes approaching GMP equalisation.

For example, in 2018 the immediate reaction was that conversion would be the preferred methodology for most schemes, avoiding the complexity of dual records administration. However, the experience of those schemes that have converted GMPs to date is that it is far from simple, in particular because of the potential tax implications for some members.

LawDeb serves on GMP equalisation working parties on many schemes and shares learnings from its 190+ appointments to deliver value to clients. Jane Beverley recently shared insights with Mallowstreet: GMP equalisation: What have trustees learnt so far?

6. Pension scams

The Pension Schemes Act contains new restrictions on transfer values, in particular introducing conditions relating to a member’s employment or place of residence - details are to be prescribed in regulations, but it is expected this will include the trustees asking for evidence of member’s employment (e.g. payslips) before a transfer can take place.

The Government has also indicated it will consult on regulations limiting the statutory right to transfer where certain ‘red flags’ are observed · TPR has launched a new campaign asking trustees, administrators and advisers to sign up to a pledge to combat pension scams (over 100 pledges have been made)

Trustees will need to ensure that that their administrators have the appropriate procedures in place.

7. Fiduciary Management

Under the terms of the CMA order, trustees cannot enter into an agreement with a fiduciary management provider covering more than 20% of a pension scheme’s assets without carrying out a competitive tender process.

Where trustees already had a fiduciary management agreement covering more than 20% of a pension scheme’s assets and there had not been a competitive tender process, the trustees must carry out a competitive tender process within five years of the first agreement (or 10 June 2021 if later – a deadline that is fast approaching) · The CMA order is expected to be replaced by DWP regulations in due course (now delayed until the first half of 2022).

Trustees with existing fiduciary management agreements in place will already have been through the process of reviewing the original appointment process to decide whether to go through a competitive tender exercise and may now be actively engaged in ensuring that their process is completed by 10 June.

8. DC – focus on value for members for smaller schemes

In September 2020, the DWP published a consultation on improving outcomes for members of DC auto-enrolment schemes – in particular this includes proposals for DC schemes with assets below £100m to report on whether the scheme provides good value for members (VFM) and (if not) whether members’ interests would be better served by winding up the scheme and transferring members’ benefits to a consolidator vehicle such as a master trust

Samantha Pitt leads LawDeb's DC approach, she is working with our Pegasus team is developing materials to help to meet these new VFM requirements and we will share more information on this shortly.

9. Cyber security – increasing area of focus

Cyber security is rising fast up pension trustee agendas with a number of cyber attacks being reported in 2020, and the lockdown highlighting pension schemes’ potential exposure to cyber risks.

TPR issued guidance on cyber security back in 2018, and PASA, PRAG and the IFoA have more recently produced guidance on cyber security and being ready in the event of a cyber attack.

Trustees need to ensure that they have given full consideration to cyber risks and have appropriate processes in place.

10. DB Consolidation

The launch in 2020 of the DB Superfund regulatory regime enabling them to seek approval from TPR means that the first transactions are now expected shortly. Trustees of schemes approaching the end-game need to consider the suitability of superfunds for the members of their schemes.

If suitable, trustees should give TPR early notice and make sure that they meet TPR’s gateway principles:

- scheme cannot afford to buy-out now, or in the foreseeable future; and
- transfer to a superfund improves the likelihood of members receiving full benefits.

We are also seeing other innovative approaches appearing: insured self-sufficiency models and capital-backed journey plans and no doubt new solutions will emerge.

Trustee Director Daniel Barlow is well-placed to discuss DB consolidation. 


To discuss any of these topics contact your usual LawDeb contact or a member of our team below. 

Contact our team

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Jane Beverley


London, UK

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Michael Chatterton

Senior Director

London, UK

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Suzy Walls

Head of Business Development

London, UK

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