Insights

Disclosing information in respect of scheme investments

  • Written By: Matthew Maneely
  • Published: Wed, 09 Sep 2020 16:30 GMT

With the approach of one of the deadlines set out in the Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019 (“the Regulations”), we thought a reminder of the approaching disclosure requirements would be useful. We will not be looking at the specific requirements around the content of the Statement of Investment Principles (“SIP”).

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Recap

The Regulations transposed the requirements of the Shareholders’ Rights Directive (more commonly known as ‘SDR II’) into UK legislation. These requirements are around schemes’ investment principles and disclosure of information both to members and, more generally, to the public at large.

There are differences between schemes that provide money purchase (DC) benefits (AVCs are excluded from the definition of such benefits) and defined benefit (DB) only schemes both in respect of the requirements of the Regulations and the timescales in which they should be put in place.

The requirements of the Regulations do not apply to any schemes with fewer than 100 members.

What should schemes do and by when?

Schemes are required to produce annual statements (an “Implementation Statement”) that coincide with the period of their scheme Annual Report and accounts.

Schemes with money purchase benefits

This includes any schemes that have DC benefits (as described above) such as hybrid schemes that provide both DB and DC benefits even if they are run as separate sections. The reporting requirements below apply to both sections.

Red items are those which must be included in the Implementation Statement.

Green items are other disclosure requirements.

From 1 October 2020

Describe any review of the SIP undertaken in the period including any changes made to it.

If no review took place in the period, the date of the last review must be stated.

Set out how the trustees acted on the principles set out in the SIP i.e. how they have applied and the extent to which the SIP has been followed during the period.

Include the Implementation Statement in the Annual Report and Accounts signed by the trustees after 1 October 2020 (within the Investment Report).

Publish the Implementation Statement on a publicly available website once the Annual report and Accounts have been signed.

In addition, from 1 October 2021

Describe the voting behaviour by, or made on behalf of, the trustees during the period.  This should include the ‘most significant’ votes cast. 

State any use of the services of a proxy voter during the period.

DB only schemes (these schemes can include AVCs)

From 1 October 2020

Set out the extent to which, in the opinion of the trustees, their policies on exercising rights (including voting rights) and undertaking engagement activities have been followed during the period.

Describe the voting behaviour by, or made on behalf of, the trustees during the period.  This should include the ‘most significant’ votes cast. 

State any use of the services of a proxy voter during the period.

Include the Implementation Statement in the Annual Report and Accounts signed by the trustees after 1 October 2020 (within the investment Report).

By 31 October 2021

Publish the Implementation Statement on a publicly available website.

There is no requirement to publish the scheme’s Annual Report and Accounts on a publicly available website, merely the Implementation Statement. However, the trustees can choose to publish the entire Annual Report and Accounts if they so wish and their auditors agree.

Penalties

The Regulations have been brought into force by amending earlier legislation (amending the Occupational Pension Schemes (Investment) Regulations 2005 (“the Investment Regulations”) and the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (“the Disclosure Regulations”)). As a result, the discretionary penalty regime for the Investment Regulations and Disclosure Regulations apply (under s168 of the Pensions Act 1993 and Regulation 5 of the Disclosure Regulations).

As a result, the Pensions Regulator may apply penalties but, it is not mandatory for them to do so.

 

DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.

Tax and Government legislation, sourced from gov.uk, is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice from their financial adviser before making financial decisions.

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