19 November 2020

Significant changes are taking place to certain inter bank offered rates (IBORs) commonly used as interest rates in derivatives and other financial contracts.  In the UK, LIBOR  (the London interbank offered rate) is expected effectively to cease to exist after the end of 2021. Regulators and industry groups have recommended that market participants fully transition existing contracts which reference an IBOR to relevant alternative, overnight risk-free rates (RFRs) before this time.

Pension trustees with direct investments in derivatives or other contracts which refer to LIBOR (or another IBOR) can expect to be asked to accept changes to their contract terms which adopt alternative RFRs and fully transition away from any IBOR before its cessation.

Our new briefing note explains the changes taking place and highlights issues which affected trustees should consider.  

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13 November 2020

Climate change risks and opportunities are increasingly seen as factors which trustees of occupational pension schemes can and should take into account when investing their scheme assets.  Trustees of both defined benefit (DB) and defined contribution (DC) schemes may experience the impact of climate change on the value of their scheme assets.

Trustees of DB schemes should also be alert to the impact of climate change on their sponsoring employer.

To read our briefing note covering the topic, please click here.

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21 September 2020

Pension scheme investment and governance have been occupying policymakers and regulators both in the UK and in Europe.  Pension trustees are faced with a challenging array of new requirements, recommendations, statements of good practice and consultation proposals coming from a wide range of sources.

This note, originally issued in September 2019, explains the new obligations on pension scheme trustees in relation to:

• Setting objectives for investment consultants
• Compulsory tendering for fiduciary managers
• Changes to the statement of investment principles (SIP)
• Changes to the annual report
• Requirements to publish certain information on a website
• Notifying members of information available on a website.

We have updated this note to take account of developments over the past year, in particular the delays to certain regulations and guidance following the Covid-19 pandemic.

Trustees should note in particular the obligation to report compliance with the investment objectives and fiduciary management requirements to the Competition and Markets Authority by 6 January 2021, unless DWP regulations are brought into force before this date.

We will cover the government's August 2020 proposals on climate-change risk, and the recent consultation paper on improving outcomes for DC members, in separate notes.

This note is aimed at trustees of occupational pension schemes.  However, advisers and employers may find the information useful. 

To read more, please click here. 

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21 September 2020

We are delighted to send you our latest pensions newsletter and to invite you to our next pensions webinar, on 7 October 2020 at 10 - 11am, which will cover:

• Investment changes, including climate change and DC value for members
• The latest on GMP equalisation
• What schemes should know about Brexit; and
• Recent Pensions Ombudsman determinations 

For more details and to register please click here. 

To access the newsletter, please click here.

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18 June 2020

The Pensions Regulator has issued guidance for supervising the commercial consolidation of defined benefit (DB) pension schemes into Superfunds.  Consolidation into "Superfunds" may be an attractive option for employers wishing to discharge their pension obligations where the cost of a traditional buy out with an insurance company is beyond reach. After transfer to a Superfund the link with the employer will be severed.  At the same time, a Superfund is expected to provide a robust level of security for members' benefits.

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14 May 2020

The government's Coronavirus Job Retention Scheme (CJRS) has thrown a lifeline to many employers and to their employees who might otherwise have lost their jobs in the current Covid-19 crisis.  For employers taking advantage of the CJRS (and the trustees of an employer's pension scheme), the scheme gives rise to several pensions-related issues, in particular:

• how pension contributions should be calculated;
• dealing with salary sacrifice arrangements;
• reducing contributions to the auto-enrolment minimum;
• auto-enrolment duties in respect of furloughed employees;
• the impact on benefits from open defined benefit (DB) schemes;
• the position of furloughed trustees; and
• life assurance benefits.

Our attached note sets out our current understanding of how these issues may be addressed, based on the recently issued Direction from HM Treasury and updated guidance from HMRC and the Pensions Regulator. 

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9 April 2020

The Pensions Regulator has published guidance on how it expects pension contributions to be paid during the current pandemic and, in particular, in respect of employees on furloughed leave. 

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26 March 2020

The COVID 19 crisis has changed the landscape for pension scheme trustees. 

The note discusses the potential impacts and actions trustees should consider taking in relation to the following areas:

• Governance
• Maintaining business as usual
• Investment
• Funding and covenant issues
• Pension Protection Fund
• Contributions and benefits
• Death benefits
• Transfers out
• Regulation
• Current projects
• Disputes

To discuss any issues arising from this note, please speak to your usual Hogan Lovells contact, or alternatively one of our pensions partners.

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18 March 2020

The Pension Protection Fund (PPF) has issued a helpful statement concerning the practicalities of certifying contingent assets in the current, highly-unusual, circumstances. 

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19 February 2020

As expected, following the general election the new government has reintroduced the Pension Schemes Bill and is taking forward changes consulted on in 2018.  The Bill will significantly increase the Pension Regulator's powers to require support for defined benefit (DB) pension schemes.

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19 February 2020

After the Carillion and BHS debacles, the Pensions Regulator (tPR) announced it was going to be "clearer, quicker and tougher". The new Pension Schemes Bill (the Bill) currently going through Parliament will give tPR significant new powers so it can beef up its approach.  Corporate groups with defined benefit pension (DB) schemes should understand the Bill’s new requirements because failure to comply could result in large fines or being charged with a criminal offence.

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1 November 2019

A year has passed since the High Court's landmark judgment in the Lloyds case confirmed that pension schemes must equalise for the effect of guaranteed minimum pensions (GMPs).  The Court gave some clarity as to how GMPs must be equalised, although many more questions remain unanswered...

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19 September 2019

Hogan Lovells pension group is delighted to send you our September e-newsletter. 

Featured are points regarding the new investment legislation, latest Pensions Ombudsman cases and a High Court case regarding tax issues.

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19 September 2019

Pension scheme investment and governance have been occupying policymakers and regulators both in the UK and in Europe.  Pension trustees are faced with a challenging array of new requirements, recommendations, statements of good practice and consultation proposals coming from a wide range of sources....

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14 August 2019

In Germany, paying contributions to the statutory (state) social security pension is compulsory for most employees and their employers. 

• In addition many companies, in particular large and international enterprises, choose to offer employer-financed (second tier) workplace pension schemes to help attract and retain staff. 
• Workplace pension arrangements may be set up using one of five different pension vehicles. Details of each type of vehicle are set out in this note. 
• Since 2002, employers must enable their staff to make employee contributions to a workplace pension scheme through salary sacrifice (Entgeltumwandlung), at the employee's request. Salary sacrifice to a workplace pension arrangement has tax advantages for the employee. 
• Under all types of workplace pension arrangement (except for new "pure DC" arrangements – please see below), the employer remains ultimately liable for any shortfall in the funding of the benefits, even where the arrangement is nominally "contribution based". 
• New legislation, the Occupational Pensions Strengthening Act (Betriebsrentenstärkungsgesetz)(BRSG) came into force on 1 January 2018. The BRSG is focussed on the following areas: 
• enabling the establishment of "pure" defined contribution (DC) arrangements, subject to certain conditions; 
• a new requirement for employers to contribute to a pension arrangement for their employees, where the employee converts (sacrifices) salary to make pension contributions 
• allowing "auto-enrolment" into an employer's salary sacrifice arrangement, with the employee having a right to opt out; and 
• increasing participation in workplace pension schemes, especially among lower paid workers. 

Please click here to read the full briefing.  

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11 June 2019

This note sets out the DWP's approach to GMP conversion and highlights some of the issues trustees and employers should consider before undertaking a conversion exercise. 

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