Welcome to your weekly update from the A&O Shearman Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
FCA consultation on targeted support: relevance to trust-based schemes
The Financial Conduct Authority (FCA) has launched a consultation on targeted support for pensions and investments. The proposals would allow FCA-regulated firms to make recommendations designed for groups or cohorts of individuals with common characteristics (in essence, a half-way house between providing generic information and guidance, and providing full, personalised advice).
The consultation discusses how the proposals could be applied to trust-based schemes and includes questions directed specifically at trustees on: whether they would want to provide something like targeted support; what this support would look like and cover (in particular, whether this would be delivered by the scheme or by a third party); and whether it can be delivered under the existing framework (and if not, why not).
The consultation will close on August 29, 2025 and the aim is for rules to be finalised by the end of the year. Once this is done, the FCA will look to clarify its guidance on the boundary between giving guidance and advice. The FCA and the Pensions Regulator (TPR) will review their joint guidance, which includes information on when trustees might be undertaking a regulated activity.
Read the consultation.
TPR to launch Pensions Data and Digital Working Group
TPR has announced that it will launch a Pensions Data and Digital Working Group in the autumn. The group will look for opportunities and solutions in relation to: open standards for data; enhancing data sharing; and prioritising digital integration, making use of the latest technology while promoting cultural change. TPR is looking for participants with a range of experience in the pensions world. Applications can be made by completing their online form.
Read the announcement.
Updates to TPR's dashboards guidance
TPR has updated its Pensions Dashboards: Initial Guidance. As well as general tidying-up, changes include:
- guidance on what to do where a scheme cannot connect by the staging date set out in DWP’s guidance
- updates on selecting and working with a connection provider
- a new section on how registration codes will work (replacing the previous registration process section), including what to do in common scenarios such as losing a registration code, changing connection date, AVCs being connected separately and how the system works for segregated schemes
- updates to the connection process, including steps to take when using more than one connection provider, and what to do if they cannot connect on the same date
- new guidance on considerations when dealing with dashboards-related complaints: schemes should seek to understand the root cause of the issue, record how and when complaints were resolved, and record remedial actions taken in respect of underlying issues as well as when these actions were carried out.
Read the updated guidance
Court grants application to correct mistaken language in schemes rules
The High Court has agreed to grant an order allowing the correction of a mistake in the drafting of the rules of a DB scheme through "corrective construction": Renishaw PLC v. Ross Trustee.
The case concerned a money purchase (DC) underpin inserted into the scheme rules in 1991. It was the common understanding of the trustee, the employer and the trustee's actuarial advisors that the intention was to introduce a conventional DC underpin, ensuring that the benefits would be no less than those which would be secured by a hypothetical DC fund (calculated as twice the member’s total contributions, adjusted for investment return). This was communicated to members and the scheme was administered and funded on that basis.
The rules, however, were amended in a way that suggested that members’ annual pensions would be the greater of (a) their DB pension and (b) the DC fund, i.e. they would receive the full value of the DC fund they had accumulated over their entire membership each year, rather than the amount of annual pension that could be purchased with that fund. This would lead to the DC "underpin" being around 11 times greater than the final salary benefit and an increase in the deferred and pensioner liabilities of the fund from just over GBP140 million to nearly GBP1.6 billion.
The judge drew on key construction cases such as Barnardo’s v. Buckinghamshire and Britvic v. Britvic to find that, while an emphasis has been placed on textual analysis by the courts where there is ambiguity in drafting, a corrective construction approach could be taken where there was a clear mistake. The judge found that this was the appropriate approach in this case, not only because the literal interpretation made other parts of the rules "meaningless" but also because it would result in "the most obviously unworkable and irrational benefit structure".
This pragmatic approach from the courts may be helpful to other schemes (although this will always depend on the specific facts of any case).
Read the case.
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