Newsletter – November 2014

DC governance and charge cap confirmed

The Department for Work and Pensions (DWP) has published a Command Paper “Better Workplace Pensions: putting savers’ interests first” which builds on its consultation in March 2014 and confirms that a charge cap of 0.75% of funds under management will be introduced on the default funds of qualifying workplace pension schemes from April 2015.

Member-borne payments for advice to employers – consultancy charges – will be banned from workplace personal pensions from April 2015 and from all schemes, along with commission payments and active member discounts, from April 2016. The level and scope of the charge cap will be reviewed in 2017.

The paper also confirms that the trustees of money purchase occupational schemes will have new duties to ensure that default arrangements are designed in members’ interests and kept under regular review, that core financial transactions are processed promptly and accurately and that they assess the value of transaction costs and charges borne by scheme members.

Providers of workplace personal pensions will need to establish Independent Governance Committees (IGCs) with similar duties and there will be new independence requirements for the trustees of multi-employer master trusts.

Separately, the government has announced that, for joiners from October 2015, short service refunds from money purchase occupational schemes will only be permitted for leavers within the first 30 days of membership rather than the current 2 years.

Regulator issues first AE fines

The Pensions Regulator’s latest automatic enrolment compliance and enforcement bulletin ( has shown that enforcement activity is increasing, with the first employers being fined for not meeting their duties. Three fixed penalty notices were issued and 163 compliance notices.

The period coincided with a significant rise in the number of employers reaching their deadline to complete their declaration of compliance, with thousands of medium sized employers (150-250 employees) reaching their staging date in April 2014.

New appointments

Lesley Titcomb has been announced as the new Chief Executive of the Pensions Regulator with effect from 2 March 2015. Ms Titcomb is currently Chief Operating Officer and Board member of the Financial Conduct Authority (FCA). She originally qualified as a Chartered Accountant with Ernst and Young.

Otto Thoresen has been appointed as the next Chair of the National Employment Savings Trust (NEST) Corporation commencing on 1 February 2015. Mr Thoresen is currently Director General at the Association of British Insurers (ABI).

Company news

Following the recent settlement in the case of the Lehman Brothers UK pension scheme, a similar deal has been reached for the MG Rover Group senior pension scheme which is now expected to avoid entry into the Pension Protection Fund (PPF).

Airline group, Monarch, has been sold to turnaround specialist Greybull Capital for a nominal sum, with the PPF taking over the pension liabilities in return for a 10% stake in the business. The estimated pension shortfall is £660m.

The Pensions Regulator has published “section 89” reports on the Kodak Pension Plan which has so far (mainly) avoided entry to the PPF and the UK Coal pension schemes (which haven’t).

This Update should not be relied upon or taken as an authoritative statement of the law. For more information, please contact us using the details shown.