26 July 2018
HM Treasury consults on the cold-calling ban
As this follows a policy-focused consultation in December 2016 (see Pensions Bulletin 2016/49), HM Treasury is now asking for views on whether the draft regulations are robust and effective in delivering the policy intentions (as listed in this latest consultation paper).
The proposal is to amend existing regulations covering privacy and electronic communications so as to specifically ban those telephone calls that constitute “direct marketing in relation to pensions” (an undefined term) except where:
- The caller is from a firm regulated by either the Financial Conduct Authority or the Pensions Regulator; and
- The receiver of the call has either given specific consent to receiving contact from the organisation making the call or is an existing customer of that organisation
The intention is that these regulations will effectively stop unsolicited direct marketing calls in relation to pensions, but still allow legitimate non-marketing business calls to get through. The draft regulations also only cover a ban on live unsolicited phone calls as existing restrictions on other electronic communications (ie texts and emails) are felt to be sufficiently strict.
The power included in the Financial Guidance and Claims Act 2018 allowing regulations to be made banning unsolicited pensions-related cold-calling also scoped out the roles of the Information Commissioner and the telecommunications regulator, Ofcom, in policing the ban (see Pensions Bulletin 2018/19).
Consultation closes on 17 August and the intention is that regulations will be laid in autumn 2018, “subject to Parliamentary timetabling”.
It is frustrating that we have had to wait almost a year (ie since the Government’s response in August 2017 to its December 2016 consultation) to get the detail in the form of a simple amendment to existing regulations, but at least we now have clarity on how the Government is to implement this ban.
In the end it is a far from draconian approach, but the structure proposed, which enables the Information Commissioner to enforce the ban, with a fine of up to £0.5m, seems reasonable. However, it is regrettable that the Government is not able to do anything about calls from abroad, unless they are made on behalf of a UK company. Hopefully, arrangements that the ICO has with international regulators and provisions under the data protection legislation when acquiring personal data will mitigate the dangers posed by such calls.
Of some concern is the caveat around Parliamentary timetabling – with the legislation requiring approval in each House and other pressing calls on the Parliamentary time, there is a danger that the delivery date of this ban could slip further.
And once delivered, the effectiveness of the telephone-only ban is likely to depend on how robustly it is communicated. The Government is intending to have a publicity drive when the ban comes into force, but quite how much muscle power will be behind it remains to be seen.
High Court rules that a salary link does not make members of closed schemes “active members”
In an important test case, the High Court has ruled that the meaning of being in “pensionable service” does not extend to those whose accrual of benefits has ceased, but who retain a salary linkage to their past service benefits whilst they remain in employment. Therefore such members are not “active members” in the eyes of the law.
The case was brought in relation to the multi-employer G4S Pension Scheme that comprised three sections, two of which closed to accrual in 2011. There was a concern in relation to these two sections that the operation of a so-called “Courage restriction”, preventing the scheme from being amended so as to terminate the final salary link, would also have the effect of triggering a section 75 debt for each participating employer in those sections when, at some point in the future, their last employee who was in that section left employment (as that would be considered to be an “employment-cessation event”).
In what was clearly dealt with as a test case, as it turned on a simple question of statutory construction with the particular facts in relation to the scheme not likely to make a difference, the Hon Justice Nugee ruled that the members concerned were not now in “pensionable service” because they were not now in service which qualified them for benefits.
Whilst it was not necessary for there to be year-on-year accrual to be in pensionable service (and the example was given of a member whose only benefit was a lump sum death in service benefit calculated by reference to his salary – who would therefore be regarded as an “active member”), the salary link being discussed did not qualify the member for any further pension after the closure date. It simply quantified the amount of pension that had already been earned by their service before the closure date.
This is a most welcome clarification of the law, especially considering the number of multi-employer DB schemes that have closed to future accrual, with perhaps a significant minority of them retaining a salary link. Participating employers in such situations remain on the hook for a section 75 debt, but the High Court has now made clear that it will not be triggered by the likely somewhat random event of when their last employee who was in the scheme leaves employment.
Will trustees need to set up their own website?
Not necessarily but some may choose to do so later this year if their scheme is one required to publish (DC) cost and charges information from their chair statements on the internet.
The background to this is that regulations in force since April require the majority of workplace schemes providing DC benefits (but, importantly, not DB schemes where the only DC benefits are AVCs) to freely publish more detailed information about charges incurred by their members on the internet for public consumption (see Pensions Bulletin 2018/09).
The general interpretation of the policy intention, however, is that the earliest that a scheme may have to comply with this is 6 November 2018, being seven months (the timescale for producing a chair’s statement) after a scheme year end of 6 April 2018 (when the regulations came into force). Schemes with later year ends will have a correspondingly longer time to prepare (up until 5 November 2019 for schemes with year ends of 5 April).
Although not totally clear we believe that if the chair’s statement is produced before the end of the seven month window then the charge information should be published on the internet as soon as possible afterwards, rather than simply doing so at the end of the seven months.
The DWP’s guidance is not overly prescriptive about how this information is published but the following points should be noted:
- The information should be publically available in a manner which allows for the content to be indexed by search engines. No passwords or personal information can be required to view this information
- It can be published on the scheme’s or employer’s website or another website such as a social media site, a blogging tool or a repository offered by a search engine provider
- A specific web address for the location of the published materials on the internet must be included in a member’s Annual Benefit Statement. The web address should be appropriately titled so that members can readily re-type it into a web browser, and should clearly signpost the nature of the information to be found at the location
When planning how to meet these requirements trustees of such DC schemes should bear in mind the likely future requirement that they will also have to publish their Statement of Investment Principles and related documents on the internet (see Pensions Bulletin 2018/25).
Now that production of pre 6 April 2018 DC chairs’ statements have either been completed or nearly completed, trustees should start to consider how they are going to meet the online publication requirements explained above. And for those schemes with a year end of 6 April, time is short as they will have to have this in place by 6 November 2018 at the latest. Trustees should also bear in mind that the requirement to freely publish chair statements on the internet will also make it easier for the Pensions Regulator to check compliance!
Is the pensions dashboard about to expire?
There was speculation last week that a reason for the delay in the publication of DWP’s promised feasibility report into the pensions dashboard was because the Government was now getting cold feet on a project that they themselves launched at the 2016 Budget.
This speculation was not dampened down when Guy Opperman, the Minister for Pensions and Financial Inclusion, appeared before the Work and Pensions Committee on 18 July 2018. Pressed on what the Government’s line now was on a project that he himself had said was definitely going to happen, Mr Opperman said “When a decision is made, it will be communicated in the appropriate and proper way and it is probably not appropriate for me to comment any further than that”.
In response to this uncertainty an e-petition has been launched which as at midday on 25 July stood at over 88,000 signatures. And the Institute and Faculty of Actuaries has weighed in with a report, whose launch has been accompanied by a statement that the pensions dashboard could be the single most effective tool in helping consumers to achieve an adequate retirement income.
Everyone knew that the delivery of the dashboard was likely to be delayed (see Pensions Bulletin 2018/02), but the DWP’s feasibility report, promised for March 2018 was expected to focus on delivery, not on whether the project should go ahead at all. We must now wait for the Government announcement, which Mr Opperman promises “will be done fairly soon”.
This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.