Developments in Employee Benefits law and practice

03 April 2018

Weekly update on new developments in the pension industry for week commencing 09 April 2018

HoC Briefing Paper on master trust regulation

The House of Commons Library has published a briefing paper on Master Trust regulation. The paper considers new provisions to regulate Master Trusts.

View the briefing paper.

SRIT Consequential Amendments Order

Under this Statutory Instrument, SI 2018/459, amendments are made to tax legislation to ensure that, following the introduction of the new 'starter' and 'intermediate' rates, tax reliefs and other relevant legislation will continue to apply to Scottish taxpayers as they are intended to; and the legislation for gift aid, the marriage allowance and pensions tax relief will work with the new Scottish rates of income tax in the UK. The Order will come into force on 30 March 2018.

CMA investment consultants market investigation update

The Competition and Markets Authority (CMA) has published a report on how pension scheme trustee boards use investment consultancy (IC) and fiduciary management (FM) services, as part its investment consultants market investigation. The CMA has also published a consultative working paper on the supply of FM services by IC firms.

The report, by IFF Research, presents the results of a survey that the CMA commissioned to gather evidence on how pension scheme trustee boards use IC and FM services and how they view these markets. As well as IFF's report of the survey findings and accompanying data tables, the CMA has published their technical appendix, which includes the questionnaire used for the survey.

The working paper sets out the CMA's initial analysis of competition issues that may arise when firms offer both IC and FM services. In particular, the paper considers the theory that customers that receive IC services are steered towards investment consultants' in-house FM services, when an alternative solution or deal could have been in their best interests. The paper also sets out and seeks views on potential remedies to any issues that the CMA may identify.

According to the paper, the demand for FM services has grown strongly in recent years and a significant proportion of FM customers have bought these services from their existing IC. The CMA has also seen some evidence of practices and behaviours on the supply and demand side that could be consistent with some customers being steered towards the FM services of their incumbent IC, without having applied much competitive pressure on the incumbent firm.

The CMA sets out a number of potential remedies, which seek to encourage trustee engagement and reduce the risk of conflict by controlling or incentivising firms' behaviours. These include -
• mandatory tendering or switching
• trustee reporting to scheme members or the Pensions Regulator
• guidance to trustees on the adoption and selection of an FM provider
• segregation of advice and marketing materials
• measures to reduce firms' incentives to promote their own FM services
• regulatory disclosure on adoption of FM
• regulatory obligations on firms' conduct
• prohibition of integrated IC-FM firms acting as an evaluator or offering comparative advice.

WPC pension freedoms final report

In the final report of its inquiry into pension freedom and choice, the Work and Pensions Committee calls for a simple package of measures to create better informed, more engaged pensions savers – and offer a default decumulation pathway to protect the less engaged.

Default impartial guidance

In its report on pension scams the Committee argued that a default impartial guidance appointment immediately prior to accessing a pension pot would result in better consumer outcomes, and the Government is moving towards that position in the Financial Claims and Guidance Bill, currently awaiting report stage in the Commons.

But greater engagement earlier in life is necessary to ensure people have pension pots worth seeking guidance on. The Committee calls for a two-pronged package to create "informed and confident savers … more likely to shop around and take sound financial decisions about their retirement … equipped to exert that competitive pressure".


The Committee proposes a new, simple, standard drawdown pension:
• The introduction of a new default decumulation pathway to support the disengaged - and protect their savings - including through NEST
• A new system of transparent and accessible information.

TPR Funding Statement 2018

The Pensions Regulator has published its annual funding statement, which sets out what the Regulator expects from trustees and employers. It notes particular concerns over the disparity between dividends and deficit-reduction payments.

A JLT Alert will be available shortly.

FCA Asset Management Study update

Further to CP17/18, the FCA has published PS18/8, which provides feedback and final rules and guidance, including:
• A requirement for fund managers to make an annual assessment of value, as part of their duty to act in the best interests of the investors in their funds;
• A requirement for fund managers to appoint a minimum of two independent directors to their boards;
• A new prescribed responsibility under SMCR (consulted on in CP17/25) and changes with regard to box profits and share classes.

Final rules for governance remedies come into effect on 30 September 2019; final rules with regard to SMCR will come into effect at the same time as the rules for the extension of the SMCR in general; rules on box profits come into effect on 1 April 2019 and the new FG (originally FG14/4, now FG18/3) comes into effect on 5 April 2018.

The FCA has also published a further consultation, CP18/9, which proposes measures intended to improve the quality, comparability and robustness of information available to investors, including proposals to ensure benchmarks are used appropriately.

Finally, the FCA has published an Occasional Paper setting out the results of behavioural research which looked at how different ways of presenting information about charges affected investors’ decision-making and their understanding and awareness of charges.

A diagram providing an overview of asset management market study remedies is available, as are the latest minutes from the Institutional Disclosure Working Group.

FCA Business Plan

The FCA has published its business plan for 2018/19, which sets out the key priorities for the coming year. While much of the media so far have picked up on the promise to focus a high level of resource on the regulatory implications of leaving the European Union, there is a section with the report on pensions & retirement income (p. 44) and on investment management (p. 38).


John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email:

Stephen Williams, Senior Research Consultant | Email: