Pensions Snapshot - April 2018

This edition of snapshot summarises some of the key legal and regulatory developments that occurred up to the end of March 2018 in relation to occupational pension schemes. The topics covered in this edition are:

Time to master the Code? Pensions Ombudsman Determination - Mr Y (PO-10171): recovery of overpayments From Green to White Court of Appeal upholds High Court decision in Shannan v Viavi Time to master the Code?

On 27 March 2018, the Pensions Regulator (TPR) published, for consultation, a Code of Practice no.15. The Code, that spans some 85 pages, relates to the authorisation and supervision of master trusts and sets out TPR's expectations of the operators of master trusts.

Broadly speaking, a master trust is an occupational pension scheme which provides money purchase benefits (whether alone or in conjunction with other benefits), is used (or is intended to be used) by two or more unconnected employers, and is not a relevant public service pension scheme. From 1 October 2018, master trusts will have to apply to TPR for authorisation.

To be authorised, a master trust must satisfy TPR that it meets, and continues to meet, the authorisation criteria introduced in the Pension Schemes Act 2017. The Code sets out TPR's expectations in this regard:

That the persons involved in the scheme are fit and proper persons - This criteria applies to various roles including scheme trustees, scheme funders and scheme strategists. More detail about these roles is set out in the Code. TPR expects that, before applying for authorisation, those running master trusts will carry out due diligence to determine whether the fit and proper criteria is met and identify any action needed. TPR explains in the Code that it will consider current and past behaviour, its impact on others and whether there has been a pattern of behaviour which creates concern. TPR will take an interest in matters that occur both within and outside of the UK; a declaration and criminal conviction certificate will be required for each individual undergoing the fit and proper person assessment. That the scheme is financially sustainable - To demonstrate that the scheme is financially sustainable, TPR expects the master trust to demonstrate that it has enough financial support to ensure it can set up and operate on a day-to-day basis and cover the costs subsequent to a triggering event (without increasing the cost to members). TPR states that a key part of demonstrating that the authorisation criteria are met is by having a business plan in place setting out the expected activities and growth of the master trust and how it will be funded. This will be "critical" to TPR's assessment of whether a master trust meets the authorisation criteria. That...