Pensions Authority provides update on code compliance
The Pensions Authority has published an update on various topics including the new pension benefit statement (PBS), the annual compliance statement (ACS) and the use of electronic communications to comply with disclosure requirements.
Below I have included excerpts from the announcement (which is available from the Authority’s Website) together with some commentary from Willis Towers Watson.
The new Pension Benefit Statement (PBS)
“The Authority will not require a PBS to be prepared with an effective date earlier than 1 January 2023 provided that trustees/registered administrators continue to provide annual benefit statements and (for DC schemes) statements of reasonable projection to active members.” PA
We understand this to mean that, where existing annual benefits and projections statement requirements for active members are met in 2022, schemes will not be required to either issue deferred member statements in 2022 or make any changes to the format of the 2022 active member statements.
“The Authority will issue guidance on the calculation assumptions to be used for the projections in the PBS by the end of July.” PA
This is welcome for the many Trustees who seek certainty before implementing the new PBS.
Annual compliance statement
“Trustees must prepare the 2022 ACS not later than 31 January 2023 in accordance with section 26T of the Act. The 2022 ACS form will remain unchanged from the form used for the 2021 ACS.
Trustees will not be required to submit the 2022 ACS to the Authority in 2023. However, the Authority will carry out sample checks and audits of this obligation as part of its ongoing supervisory activity…
The Authority is currently developing its systems to enable trustees to make a digital submission of the ACS. Trustees will be required to digitally submit the 2023 ACS to the Authority in February 2024. Further details on registering for the digital submission of the ACS will be issued in due course.”
This effectively means that the requirement to submit an ACS to the Pensions Authority is deferred by one further year. The ACS will still need to be prepared and signed, but we also understand that the 2022 format will be unchanged from that used in 2021. This unexpected news gives schemes planning certainty and should help to ensure that most schemes can self-certify their compliance when completing their next ACS. Trustees should bear in mind that the deadline for compliance with all IORPS II requirements (other than new PBS) is still 31 December 2022.
Use of electronic communications
“Trustees are permitted to provide information to members or beneficiaries using electronic methods in accordance with section 2(8) of the Pensions Act. In doing so, they need to comply with the Electronic Commerce Act 2000 (the ECA).
The Authority confirms that trustees are responsible for determining how they comply with the ECA requirements and what type of consent is required from members to receive information electronically (i.e., active or passive consent). The Authority’s view is that trustees should have regard to the specific profile and experience of their own scheme membership when deciding what type of consent is most appropriate.”
There has been some confusion as to whether Section 2(8) of the Pensions Act avoided a need for Trustees to comply with ECA requirements. The Authority’s stance confirms that it considers the ECA to apply and leaves it for Trustees to decide whether compliance with the ECA can be achieved by means of passive or active consent.
The announcement here amounts to guidance that Trustees need to consider membership profile and experience when deciding the issue. Trustees should also carefully consider other factors, such as GDPR requirements and potential member risk exposures, when determining how best to communicate with former members. Care will need to be taken if benefit statements are being sent to unverified addresses which may be used improperly by an unintended recipient.
For more information, please speak to your regular Willis Towers Watson consultant about the next steps that need to be taken, or email us directly.