Pensions Bulletin 2019/46

Our viewpoint

Regulator publishes investment governance guidance

The suite of guides to assist trustees in complying with the Competition and Markets Authority’s remedies in relation to investment governance issues, as set out in the CMA’s Order (see Pensions Bulletin 2019/23), has been finalised.  This follows a consultation on these documents launched by the Pensions Regulator in July (see Pensions Bulletin 2019/30).

There are four guides:

  • Choose an investment governance model that sets out the matters that trustees should understand when deciding on investment governance, with the guidance focusing on two models – investment consultancy and full fiduciary management
  • Tender for fiduciary management services whose purpose is to provide trustees with practical information and key matters to consider when putting together a competitive tender exercise to appoint a fiduciary manager, as required by the CMA Order when appointing fiduciary managers in relation to 20% or more of scheme assets
  • Tender for investment consultancy services which is a ‘good practice’ guide to help trustees apply the principles of tendering when selecting investment advisers – there being no legal requirement to do so under the CMA Order
  • Set objectives for your investment consultant which helps trustees understand their duty under the CMA Order to set objectives for providers of investment consultancy services

The Regulator’s response to the consultation reveals that it has made a number of adjustments to the guides reflecting some of the comments received.  In particular, in the last guide it is now clearer that advice from an actuary should only fall to be treated as investment consultancy services where in fact that actuary is providing investment advice, which could happen where the scheme does not have a separate investment adviser.  However, the guide does continue to use the term “investment consultancy services” to cover services that may well not be subject to the CMA Order requirement.

The new duties set out in the CMA Order take effect from 10 December 2019.  However, this Order should be replaced by DWP regulations around the turn of the year, with these coming into force on 6 April 2020.  And they in turn will require the Regulator to review this guidance suite so that in future it talks to the DWP regulations rather than the CMA Order.


The draft guidance resulted in some concerns that the Regulator was drawing actuarial work, per se, into the CMA Order’s ambit.  While generally speaking the Regulator is not shy of pushing at boundaries, its finalised guidance, whilst promoting objective setting as good practice for any trustee advisor, is more balanced than its draft.  And importantly, it is only ‘guidance’ – not law.

The Christmas pensions countdown

As we move into the twelfth month of the year, what is yet to come on the pensions regulatory front that was promised for 2019?  Quite a lot, but it seems unlikely that we will see more than a fraction of it this side of the festive break.

Here is what had been promised for delivery before the end of the year:

  • The DWP has many things on the stocks, but none are specifically promised for delivery by the end of 2019, other than the regulations mentioned in the article above
  • HMRC is aiming to publish its first tranche of guidance on the tax aspects of GMP equalisation, and HM Treasury is expected to consult on changes to regulations to bring investment consultants within the remit of the Financial Conduct Authority (see Pensions Bulletin 2019/30)
  • The FCA itself has promised a great deal for delivery by the end of 2019. A policy statement and final rules on the extension of the remit of Independent Governance Committees is promised (see Pensions Bulletin 2019/15).  The same has been promised in relation to proposals to facilitate pension schemes to invest in “patient capital” (see Pensions Bulletin 2018/51) and on how costs and charges relating to workplace personal pension schemes should be published and disclosed to scheme members (see Pensions Bulletin 2019/09)
  • The Pensions Regulator was expected to consult on guidance for pension schemes on climate-related practices across governance, risk management, scenario analysis and disclosure (see Pensions Bulletin 2019/27), but it looks as if this will now be late. A formal consultation on the Regulator’s proposals to streamline its Codes of Practice (see Pensions Bulletin 2019/28) was also expected but appears to have been delayed until the New Year.  This is linked to the long-delayed consultation on a Code relating to governance requirements in order that the UK complies with the IORP II Directive – which DWP ministers have quite misleadingly been saying are already in place.  There is also a promise to consult with the FCA on “the entire consumer pension journey” (see Pensions Bulletin 2018/42) but that seems to be lost in fog.  And of course there is the much anticipated and much delayed consultation on the revised DB funding code (see Pensions Bulletin 2019/39), but maybe we will see this in early January
  • The PPF is due to respond to its consultation on its 2020/21 levy proposals (see Pensions Bulletin 2019/37) and is almost certain to do so before the end of the year. But at around the same time (on 19 December to be precise) we are expecting the European Court of Justice to rule on the German Bauer case with potentially huge implications for the level of PPF compensation (see Pensions Bulletin 2019/20)
  • EIOPA is expected to publish the results of its 2019 stress tests of both DB and DC schemes in December (see Pensions Bulletin 2019/18). There may be some barbed comments about the UK’s lack of participation
  • Finally we have yet to hear formally from the Professional Trustee Standards Working Group who were expected to roll out their accreditation process in relation to professional trustees this autumn (see Pensions Bulletin 2019/28), but it now seems that we need to wait until the New Year

Many more things are being worked on by the bodies mentioned above, and by others, some of which have been ongoing for a while.  What is quite clear from an examination of what is on the stocks is that there is a lot going on with the promise of more in 2020.


Whilst it is tempting to wheel out the election and purdah by way of excuse for non-delivery by the end of 2019, it is more likely that most reasons for delay are simply because it is taking much longer than expected, shifting priorities, or a lack of resources.

DWP proposed pension and benefit rates published

The DWP has placed a copy of its proposed pension and benefit rates for 2020/21 in the libraries of both the House of Commons and the House of Lords.  The document confirms that next April the Basic State Pension will rise to £134.25 per week whilst the full rate of the new State Pension will rise to £175.20 per week.  Both these figures were announced by Thérèse Coffey on 4 November (see Pensions Bulletin 2019/42).

Other figures contained within the document include that the Basic State Pension for a couple rises to £214.70 per week, the State Pension Guarantee Credit will rise to £173.75 pw for an individual and £265.20 pw for a couple.  The maximum savings credit, available only to those reaching State Pension Age before 6 April 2016, rises to £13.97 pw for an individual and £15.62 pw for a couple.

The accompanying letter makes it clear that this is not a fully comprehensive list as the DWP is still awaiting confirmation from HMRC of the Lower Earnings Level for NIC purposes and the National Living Wage.


It is good that the dissolution of Parliament has not got in the way of these rates being published in an orderly fashion, although we will need to get to the other side of the Budget before the DWP will be able to finish the job.

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.

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