Pension trustees urged to widen communication amid regulatory challenges

Pension trustees and scheme sponsors may need to achieve a new level of openness to avoid falling foul of The Pensions Regulator’s (TPR’s) new legal powers, according to Squire Patton Boggs.

The law firm, which released the fifth stage of its examination of the current challenges faced by trustees and sponsoring employers of occupational pension schemes, said both parties would need to be more forthcoming regarding proposed corporate activity so that each could take any necessary actions to avoid attracting enforcement action by TPR.

Focusing on the regulatory and legal issues that schemes are facing, it added that this would mean overcoming commercial sensitivity and confidentiality issues in order to avoid putting members’ retirement savings at risk.

Furthermore, the firm pointed out that many trustees are still unaware about where to draw the line when it comes to regulated activity.

The blog post highlighted the fact that there have been concerns that modelling tools offered to members for the illustration of their retirement options could amount to regulated activity, leading Squire Patton Boggs to call for trustees to read recent consultations and guides on the subject in order to fully understand the kind of communications that constitute regulated advice.

Another challenge identified by Squire Patton Boggs was the impact of the Lifetime Allowance freeze detailed in the Spring Budget, with the firm stating that trustees needed to be aware of the potential impact on scheme members and consider what action may be needed to ensure communications and administrative practices reflect the correct tax position.

Finally, the firm identified concerns stemming from the UK’s exit from the EU.

The blog post pointed out that trustees could have trouble when trying to enforce a guarantee or other security given by an EU-based company, calling on trustees who are relying heavily on such guarantees to seek advice.

The blog post argued: “Trustees and sponsoring employers already spend considerable time and effort to ensure they achieve the objective of paying the correct benefits to the correct members, at the correct time whilst complying with their trust and regulatory obligations. Even so, evolving regulation could have a fundamental impact on how they do so.”

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