A reminder of the background
The UK Pensions Schemes Act 2021 (the Act) set out a regulatory framework for additional mandatory procedural steps to be taken in respect of specified corporate activity in circumstances where a corporate group supports a UK defined benefit pension scheme. Those additional requirements include obligations to notify the Pensions Regulator (the Regulator) and prepare a pensions impact statement (known as an ‘accompanying statement’).
The regulatory framework in the Act, however, envisages detailed regulations setting out (amongst other things) the specific corporate activity to be caught by the new obligations and the timing triggers for the notifications and accompanying statements. The Department for Work and Pensions (DWP) published a consultation on those draft regulations last year and it had been expected that the new requirements would come into force in April 2022.
Concerns about the regulations
As explored in our blog post from September 2021, there were significant areas of concern with the draft regulations, both in terms of how they defined the corporate events which would be caught and how they defined the timing triggers. Numerous industry bodies raised these concerns in formal responses to the consultation, which closed in October 2021.
Might no news be good news?
There has been no formal update from DWP in relation to the draft regulations since the consultation closed in October 2021, and the industry has been watching carefully to see if final regulations would be laid before Parliament in time for them to become law in April 2022. This hasn’t happened, so we can only assume that the consultation responses and draft regulations are still being considered by the DWP – perhaps with a view to the regulations coming into force in October 2022 (October being the other “usual” month for pensions regulations to take effect).
If this is the case, then it is to be welcomed. Taking the time to get the regulations right is far more likely to provide effective incremental protection to defined benefit pension schemes than more speedily introducing flawed regulations which result in uncertainty for the industry and potentially the Regulator being overwhelmed by notifications as corporates seek to comply with the technical letter of the law. Ideally, the process between now and October would involve:
- DWP publishing further revised draft regulations which seek to address the concerns raised in the consultation. Given such regulations would be materially different from the draft published last year, a further period of consultation would be hugely beneficial to allow proper feedback from the industry on whether the concerns had been addressed.
- Following such consultation, DWP publishing final regulations well in advance of the October 2022 start date. This would allow for further important steps to be taken to prepare for the new regime before the regulations become law.
- As a result, the Regulator being given time to prepare, and to consult on, a revised direction under the new regulations and revised guidance – both of which will play a crucial part in making the new regime workable and fit for purpose.
If you would like to discuss any issues relating to the notifiable events regulations, or the Pension Schemes Act 2021 more broadly, please get in touch with your usual Freshfields contact or any of the authors.