1. Pensions agenda
Spring clean your scheme
Date: April 2013 Advisers: Eversheds LLP
1 Pensions Regulator’s new objective – In the 2013 Budget the Chancellor announced
that the Pensions Regulator will be given a new objective. The precise wording is still to
be confirmed but the Chancellor said that, in future, the Regulator would have to have
regard to the “growth prospects of employers”. Read more.
Action: Employers and trustees should consider how this may impact their
scheme’s funding arrangements and whether they should factor the new
objective into current negotiations.
2 Abolition of DB contracting-out – The Chancellor also confirmed in his Budget speech
that the introduction of the single-tier state pension (and consequently the abolition
of DB contracting-out) will be brought forward to April 2016. Private sector employers
will be able to amend their scheme to offset the increase in their national insurance
contributions resulting from this. Read more.
Action: Employers should assess how the abolition of DB contracting-out
will impact them and consider what, if any, changes they plan to make to
their scheme.
3 Downgrading of RPI – In a surprise move, the UK Statistics Authority has announced
that the Retail Prices Index (RPI) will no longer be designated as a national statistic, on
the basis that it does not meet international standards. This has created uncertainty over
whether RPI remains a suitable index for determining pension increases and revaluation
under DB schemes.
Action: Trustees and scheme sponsors should take advice on how the
downgrading of RPI impacts their scheme.
4 DC Governance – Auto-enrolment means that the governance of DC schemes is in
the spotlight now more than ever. The Pensions Regulator has recently issued a draft
Code of Practice and regulatory guidance on DC governance, which includes 31 quality
features that it would expect to see in a good quality DC scheme.
Action: Trustees of DC schemes and pension providers should review their
schemes to ensure that they meet the requirements set out in the Regulator’s
new Code of Practice and regulatory guidance.
5 New Fair Deal guidance – HM Treasury is expected to finalise its new Fair Deal
guidance shortly. If the new guidance follows the draft issued last November, private
sector employers will no longer be able to provide broadly comparable schemes to
newly transferred staff, who will instead have to be given continued access to the
relevant public service scheme.
Action: Private sector contractors and public sector bodies covered by Fair
Deal need to consider how the new guidance will impact future outsourcings
and re-tenders. Read more.

2. 6 New disclosure requirements – New disclosure requirements for occupational and personal
pension schemes are due to come into force on 1 October 2013. The most significant changes
include new requirements for DC schemes to provide information to members about lifestyle
investment options (including target date funds) and a clarification of the rules on
electronic disclosure.
Action: Trustees and pension providers must ensure that they are ready to comply
with the new disclosure requirements by 1 October 2013.
7 Auto-enrolment simplification – The DWP plans to make various technical changes to the
auto-enrolment legislation including changing the definition of ‘pay reference period’ to align
it to the way in which payroll systems currently operate and introducing an exemption for
workers with fixed or enhanced protection. It is also considering introducing an easement for
employers that automatically enrol all of their staff. Read more.
Action: Employers will need to review their auto-enrolment processes and
communications in light of these changes, including the process for dealing with
individuals with fixed or enhanced protection.
8 New clearing and reporting requirements for OTC derivatives – new clearing and reporting
requirements for over-the-counter (OTC) derivatives are due to apply to pension schemes from
August 2015.
Action: Although these new requirements are still some way off, it is important
that trustees understand these changes, including how they will impact the cost
of entering into OTC derivatives and the new collateral requirements.
9 Cash incentives for agreement to scheme changes – Any employers planning to offer
incentives in return for the agreement of their staff to proposed scheme changes (such as
closure to future accrual) must ensure that they comply with the Regulator’s 2008 guidance
on employee consultation exercises.
Action: Employers need to carefully consider the impact of the Regulator’s guidance
before undertaking a consultation exercise in which they are planning to offer an
incentive to staff who agree to the proposed changes.
10 Changes to TUPE requirements – From 1 October 2013, where staff have access to a
DC occupational pension scheme immediately before a TUPE transfer, the new employer
will be able to match the contributions paid by the former employer, instead of matching
contributions up to 6%. Read more.
Action: Companies need to be aware of these changes when considering internal
reorganisations or the acquisition of staff from another business.
Pensions agenda
April 2013
If you have queries about these or any other issues affecting your
pension scheme please contact your usual Eversheds’ adviser or contact:
Anthony Arter
Head of Pensions
0845 497 0536
anthonyarter@eversheds.com
Francois Barker
Birmingham
0845 497 1559
francoisbarker@eversheds.com
Ian Davies
Cardiff
0845 498 7601
iandavies@eversheds.com
Jeremy Goodwin
London
0845 497 4564
jeremygoodwin@eversheds.com
Ele Lovering
Manchester
0845 497 8120
elelovering@eversheds.com
Richard Shelton
Leeds
0845 498 4847
richardshelton@eversheds.com
www.eversheds.com
©Eversheds LLP 2013. Eversheds LLP
is a limited liability partnership.
EHRG.911If you missed our
January 2013 edition
of Pensions Agenda
click here.