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Pension dates in December

  • United Kingdom
  • Pensions


Although it’s nearing Christmas, it’s not quite time for trustees and sponsors to down tools yet. There are still some things to think about this year and some key pensions dates in December. (And we’re not even talking about the general election.)

Opposite-sex civil partners

From 2 December 2019, legislation allows opposite-sex couples to apply for civil partnerships in England and Wales and they can be registered from 31 December 2019. Similar legislation is anticipated in Scotland and Northern Ireland.

Why is this relevant for pension schemes? On the death of a member in an opposite-sex civil partnership, appropriate death benefits will need to be provided to their surviving partner.

Trustees should review scheme rules to check whether they need to make any amendments to ensure that opposite-sex civil partners receive appropriate benefits. This will depend largely on how “civil partner” is currently defined in your scheme rules. If it is defined by reference to legislation, then changes are unlikely to be needed.

Anything else to be aware of? Surviving female civil partners will be entitled to receive a widowers GMP (calculated on service from April 1988), rather than the more generous widows GMP (calculated on service from 1978) that a surviving female spouse would be entitled to.

Although conversion of marriage to civil partnership is not currently possible, the Government has consulted on it and if legislation does, in future, permit it, opposite-sex spouses converting to civil partnerships may find that a surviving female’s GMP entitlement is reduced as a result (as the law stands).

Existing overseas opposite-sex civil partnerships from jurisdictions which already allow them (such as the Isle of Man and the Netherlands) are now automatically recognised in England and Wales.

Objectives for investment consultants

What’s happening? With effect from 10 December 2019, trustees will not be able to obtain investment consultancy services unless they have set the consultant “strategic objectives”. This applies to both existing and new contracts for such services.

This requirement is set out in the Competition and Markets Authority’s Order and covers advice in relation to investments trustees should make or retain, the preparation or revision of the statement of investment principles, strategic asset allocation, and manager selection. However, there are some exemptions, including where the consultant forms part of a participating employer’s group.

It is intended that this requirement will be absorbed into DWP regulations in 2020. The consultation paper says that objectives should include a clear definition of the outcome expected and the timescale for it to be delivered. They should also be relevant to the services provided and enable trustees to measure performance. Objectives should be reviewed every 3 years and performance should be tested against them every 12 months.

Regulator guidance: The Pensions Regulator has issued guidance on when these requirements will apply and what trustees need to take into account when setting objectives. The guidance gives examples of objective “scorecards” that could be used in both a DB and DC context to assess performance against objectives.

The Regulator encourages trustees “as a matter of good governance, to set objectives even where the legal requirement may not directly apply”. This is because by “putting objectives in place, trustees will be better positioned to assess the quality of the service they receive and to deliver better outcomes for their members”.

Anything else to be aware of?: Currently there is an obligation to report compliance to the CMA by January 2021. However, if the proposed legislation is enacted next year, trustees will instead have to provide information in their scheme return on whether they have set and reviewed performance against objectives.

Appointment of fiduciary managers

What’s happening? The same CMA Order also requires trustees to carry out a competitive tender process if they are entering into a fiduciary management agreement which will take the total of scheme assets under fiduciary management to 20% or more. Where there are existing fiduciary management agreements in place that were not competitively tendered and the 20% threshold has been reached, there are also provisions for those agreements to be retendered.

For these purposes, a competitive tender process is one in which the trustees have “invited and used reasonable endeavours to obtain bids… from three or more unrelated [fiduciary managers] and have evaluated the bids received”.

For more information on these requirements and when existing arrangements need to be retendered, see our Article.

Regulator guidance: Trustees appointing fiduciary managers should have regard to new Pensions Regulator guidance which sets out key principles for trustees to consider when carrying out a competitive tender.