Pensions: TPR & PPF publish their reports, transfers to QROPS fall and more

• Transfers to QROPS fall again
• High Court orders pension introducers to pay £10.7m in restitution
• TPR: Scheme funding analysis 2020
• TPR publishes automatic enrolment declaration of compliance report
• PPF publishes inaugural responsible investment report
• MPs ask pensions industry for workable solutions to the small DC pot issue

Transfers to QROPS fall again
(AF3, FA2, JO5, RO4, RO8)

HMRC publish data annually on the number and value of transfers from UK registered pension schemes to QROPS. Over the last five years the number and value of transfers has been trending downwards, this year is no different.

The number of transfers into QROPS has fallen to 4,400 in 2019/20 vs 5,000 in 2018/19 a 12% drop. The peak was 2014/15 but the largest drop occurred when the overseas transfer charge was introduced just before the beginning of 2017/18.

The total value of transfers has declined every year for the last five years from its peak in 2014/15. In 2019/20 the total value of transfers was £550m over £1000m lower than the peak. 

Even the average value of transfers is down a little on last year, with a drop of 2%. This is the second year in a row there has been such a reduction.

High Court orders pension introducers to pay £10.7m in restitution
(AF3, FA2, JO5, RO4, RO8)

Following a judgment delivered at the end of June, the High Court has ordered two unregulated pension introducers and three directors to pay a total of £10,715,000 in restitution to clients who were mis-sold pensions. In a case brought by the FCA, the High Court has ruled that Avacade and Alexandra Associates must refund thousands of pension savers who were induced to transfer their retirement savings into self-invested personal pensions in order to invest in alternative assets, such as tree plantations and Brazilian property developments. In addition, Alexandra Associates and the directors have been banned from engaging in regulated activities in the UK without authorisation.

Commenting on the ruling, FCA Executive Director of Enforcement and Market Oversight Mark Steward said in a Press Release: “The FCA will make wrongdoers financially accountable to consumers whom, as the Court recognises in this decision, '... include elderly and vulnerable citizens who have paid their due share of income tax, made sacrifices, and taken prudential decisions for their future retirement over the course of an honest working life'.” 

TPR: Scheme funding analysis 2020
(AF3, FA2, JO5, RO4, RO8)

The Pensions Regulator (TPR) has published the 2020 update to its annual funding statistics for UK DB and hybrid schemes. The 2020 scheme funding analysis is based on Tranche 13 schemes, with effective valuation dates falling from 22 September 2017 to 21 September 2018 inclusive. According to the report, by the end of January 2020, TPR had received over 1,730 valuations with an effective valuation date for Tranche 13. TPR analysis of these valuations indicates that growth in assets exceeded the growth in liabilities between Tranche 10 and 13 valuation dates for a majority of schemes, resulting in a relatively increased average funding ratio on a Technical Provisions funding basis. 

TPR publishes automatic enrolment declaration of compliance report
(AF3, FA2, JO5, RO4, RO8)

The Pensions Regulator (TPR) has published its monthly report on automatic enrolment, which sets out information based on data submitted by employers. According to the report, between July 2012 and the end of July 2020, 1,705,727 employers confirmed that they had met their automatic enrolment duties. The report also states that 10,336,000 eligible jobholders were automatically enrolled into an automatic enrolment pension scheme during the same period.

PPF publishes inaugural responsible investment report
(AF3, FA2, JO5, RO4, RO8)

The Pension Protection Fund (PPF) has published its first Responsible Investment (RI) Report, which outlines the PPF's RI strategy and progress to date. According to the report, the PPF has progressed 51% of its RI objectives to the next milestone during 2019/20. Looking to the future, the report highlights that climate change remains a priority, stating: “We are planning to extend the measurement to our real assets in the next phase of our climate change implementation plan, focusing also on assessing the physical climate-related risks that they could be vulnerable to.” 

MPs ask pensions industry for workable solutions to the small DC pot issue
(AF3, FA2, JO5, RO4, RO8)

The Work and Pensions Committee has published an open letter to the pensions industry about the problem of proliferating small pension pots. In his letter, Mr Timms said the number of small DC pension pots has seen an increase since the introduction of auto-enrolment and the subsequent impact on charging structures and flat fees is particularly concerning for those with small pension pots. Mr Timms suggested that: “Consolidating small pots might form a major part of reducing the total cost of saving to individuals, whilst enabling a sustainable, competitive market for lower paid employees.”

The letter refers to the DWP’s call for evidence on the default fund charge cap and standardised cost disclosure, which includes a question on consolidating small dormant/deferred pots.

The MPs urge those responding to this consultation to propose workable solutions for consolidating very small pension pots and to send these also to the Committee as they intend to consider this topic further in early 2021.