Down to the Wire!

Frustrated computer user

On 28 April 2022, at 4:35 pm we issued legal advice to our client regarding the GMP conversion exercise for two schemes, along with final versions of the deed of amendment to bring into effect GMP conversion; the Conversion Date was set for 1 May 2022.  At 4:43 pm, we get an e-mail from our professional support lawyer stating that the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill, a private member’s bill proposing further changes to the GMP conversion legislation, has just received Royal Assent and is now the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Act 2022; “all those currently advising on GMP conversion should take note!” Talk about bad timing! As the reader will be aware, GMP conversion projects require months of planning and negotiations between advisers, trustees and employers. Would the changes introduced by the Act be in force on 1 May?! Would we have to update our legal advice? Could the deeds still be signed?! Would we have to send out new communications to members?

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Getting to Net Zero: Lessons from Butler-Sloss v the Charity Commissioners & the Attorney General for Pension Schemes


Once in a while trustees get frustrated with what the law appears to tell them is their fiduciary duty. If they can afford it, trustees can resolve such ambiguities or uncertainty by getting a ruling from the courts as to how to interpret their duties. This is what two sets of charitable trustees recently did in relation to an area of keen interest to pension trustees: how can one implement an investment strategy that is based on a commitment to align with the Paris Agreement on climate change (in keeping with a charitable purpose that expressly included environmental protection), which would inevitably mean excluding a significant part of the investment universe, without sacrificing financial returns to the trust?

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JEG or ALAPBAMAN? How Much is Enough for Pensions Single Code Compliance?

Plan B

From memory, the term “good governance” started to be widely used in the pensions industry at around the same time that the Pensions Act 2004 came into force. At first, it was a bit of a nebulous concept that could have been loosely described as 1. Complying with the requirements and expectations of The (then new) Pensions Regulator (TPR) and 2. A dollop of good practice on top.

Immediately post Pensions Act 2004, clients commonly asked what other clients were doing, as they wanted to benchmark themselves – i.e. they wanted to “do enough governance” without the scheme budget running away. The acronyms “JEG” and “ALAPBAMAN” were used (“Just Enough Governance” and “As Little As Possible But As Much As Necessary”). Continue Reading

The Big Reveal: Corporate Transparency and What It Means for Pension Scheme Trustees

Modern glass architecture


In February 2022 the UK Government unveiled its long-awaited plans to improve corporate transparency and reform the company register framework, in a move widely regarded as having been accelerated (at least in part) in response to the conflict in Ukraine. In this blog, we look at how the changes could affect UK pension scheme trustees.

Planned Legislative Reform

In summary, the proposed changes that pension scheme trustees should monitor closely are as follows.

  • Companies will be allowed a maximum of one “layer” of corporate directors, which must be based in the UK, and the natural persons directing each corporate director will be subject to identity verification.
  • Companies House will take on more of a regulator’s role – it will review and query information that is submitted, with individuals who fail to verify their identity or comply with new requirements under these reforms becoming subject to new criminal and civil sanctions.
  • Anyone wishing to make a filing at Companies House, alongside all company directors and persons with significant control, must verify their identity using photographic identification.

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DOL Crypto Guidance Heeds Strong Warning to Retirement Plan Sponsors Looking to Add Digital Asset Investments to Retirement Plan Lineups

Retirement JarDirectly on the heels of the Biden Administration’s digital asset Executive Order issued on March 9, 2022[1] (Executive Order), the U.S. Department of Labor (DOL) published its own guidance on the use of cryptocurrencies as a 401(k) plan investment in Compliance Assistance Release No. 2022-01 (CAR).   The DOL guidance is not limited to crypto, but advises plan fiduciaries regarding all digital assets, including Ethereum, tokens, and other derivations thereof.

Ominous Warning – Duty of Prudence & Personal Liability at Stake

The DOL CAR is nothing short of an ominous warning for plan fiduciaries.  Similar to the Executive Order, the DOL CAR highlights that there are many risks involved when offering cryptocurrencies or other digital assets as plan investment options.  In light of these risks, the DOL CAR “cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants.”

The DOL CAR reminds plan fiduciaries of their obligations under Section 404 of  the Employee Retirement Income Security Act of 1974 (ERISA) when assessing crypto or digital asset investments stating that retirement plan fiduciaries must act solely in the financial interest of plan participants, and the duty of prudence and loyalty obligations are the highest known to the law.  It further reminds fiduciaries of their obligations associated with retirement plan investments and the potential for personal liability for plan losses if they breach these fiduciary liabilities.  Again, by restating ERISA’s fiduciary duties and the liability associated with any breach of such duties, the DOL CAR appears to be flashing red light warning signs that any retirement plan fiduciary that dares enter the digital asset realm and pushes forward a crypto retirement plan investment could be subject to the most severe consequences under ERISA.

            Duty of Ongoing Monitoring

The DOL CAR very timely applies the recent Supreme Court holding on retirement plan investments in Hughes v. Northwestern and Tibble v. Edison by reiterating that the duty of prudence does not merely include selecting investments, but also extends to the duty to monitor the investments selected on an ongoing basis; any failure to remove an imprudent investment option is a breach of such duty.[2]

            Serious Concerns around Crypto Investing

Keeping on point with the Administration’s Executive Order, the DOL CAR further warns that because cryptocurrency is in its nascent stages, the DOL “has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies,” or any other similar investment products.  The DOL believes that any such investment poses significant risks to participants’ accounts, including risks of fraud, theft, and loss.

In particular, the DOL highlights the following areas of concern for retirement plan fiduciaries:

  1. Investments in cryptocurrencies are highly speculative due to the extreme pricing volatility caused by the uncertainties associated with crypto valuations, according to the Securities and Exchange Commission.
  2. Cryptocurrencies are capable of being promoted and attracting plan participants with little knowledge of investing who expect high investment returns but have insufficient knowledge of the potential downside related to such highly volatile crypto investments.
  3. There are significant custodial and recordkeeping concerns, as the loss of a password could result in the complete loss of a cryptocurrency asset.
  4. Cryptocurrencies carry a risk of unreliable valuation, with inconsistent accounting treatment.
  5. Cryptocurrencies may impose a regulatory burden since the cryptocurrency markets are evolving, and including cryptocurrencies as 401(k) investment options would expose plan fiduciaries to the potential liability of entering into unlawful transactions with inadequate disclosures for participants.

The DOL CAR concludes by stating that its employee benefits arm, the Employee Benefits Security Administration (EBSA) will conduct an investigative program directly aimed at plans that offer crypto and other digital asset investment.  As part of the investigative program, the EBSA will take appropriate action to protect the interest of plan participants, including the questioning of plan fiduciaries who include such investment options through brokerage windows as to how they “square their action with their duties of prudence and loyalty.”

[1] Exec. Order on Ensuring Responsible Development of Digital Assets (March 9, 2022),

[2] Hughes v. Northwestern Univ., 142 S. Ct. 737, 742 (2022); Tibble v. Edison Int’l, 575 U.S. 523, 530 (2015).

Target Date Fund Performance Litigation – Advice for Plan Fiduciaries

Retirement JarIn recent years, there have been more than 150 lawsuits alleging violations of ERISA[1] fiduciary obligations that are based on “excessive fees” being charged to participants in defined contribution retirement plans.

A more recent trend also seems to be focusing on the investment performance of target date funds. This Post discusses that litigation trend, and offers some practical advice to employer investment committees or other plan fiduciaries.

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Pensions Dashboards – It Is Getting Real

Pension PoundsAs a consumer, I am a big fan of the concept of dashboards. A brilliant idea. As a lawyer advising pension plan trustees, I am looking forward to helping my clients to make them a reality. Until now, dashboards have felt a long way off in the future and there has been no shortage of pressing work to do (Guaranteed Minimum Pension equalisation anyone?). However, we received a lot more information with the publication of the DWP’s consultation  on 31 January – 137 pages’ worth.

Given the evident complexity, I have to say that recent criticism levelled on the pensions industry for not having taken action voluntarily feels a bit harsh. The investment is huge in terms of both time and money and personally I believe it is unrealistic to think that dashboards could ever have come to fruition without compulsion.

There is a lot to digest as we prepare Squire Patton Boggs’ detailed response to the consultation but here are a few immediate thoughts on the proposals: Continue Reading

Data Protection Day – a Time for Reflection

Email concept with laptop and girl handsToday, 28 January, is international “data protection day” (as explained on Wikipedia). Its purpose is to raise awareness and promote privacy and data protection best practice; there is no suggestion that organisations (including pension schemes) can ignore data protection the other 364 days of the year!

Here in the UK, many clients will remember the rush to get their pension schemes compliant with the EU’s General Data Protection Regulation (GDPR) back in 2018. But, like the pensions industry itself, data protection is a fast moving legal and regulatory area. Not least, the introduction of the Data Protection Act 2018; the adoption of the UK’s own version of the GDPR following Brexit; the Information Commissioner’s Office’s (ICO) new Code of Practice on data sharing; court cases impacting privacy notices and international data transfers; a growing awareness of data privacy issues meaning pension scheme members are increasingly cautious about the use of their personal data and streetwise about their rights; and the UK government is consulting on an overhaul of the data protection regime. What’s more, both the ICO and The Pensions Regulator (TPR) say data protection should be regularly reviewed, and the ICO can fine up to £17.5 million or 4% of global turnover for the most serious cases of non-compliance. So what does data protection day 2022 mean for UK pension schemes? If you have not done so already, it’s a timely reminder to review your scheme’s data protection status. Here are four key issues to follow up on. Continue Reading

New Notifiable Events may Trump Criminal Sanctions as the Biggest Potential Disruptor of Corporate Activity

Business people shaking handsThe new Pension Schemes Act 2021 paved the way for potential changes to the notifiable events framework which is intended to give The Pensions Regulator (TPR) early warning of possible calls on the Pension Protection Fund.

The Department for Work and Pensions (DWP) has now issued draft regulations (Draft Regulations) and consulted on proposed changes to the notifiable events framework to introduce new requirements to notify TPR of material corporate activity that may affect a pension scheme, with high penalties for failure to comply. The consultation closed on 27 October 2021, and the regulations are expected to come into force in April 2022.

New “Super” Notifiable Events

The Draft Regulations establish two new notifiable events and update an existing notifiable event, each treated as “super” notifiable events, addressing material corporate sales and granting or extending certain security. Continue Reading

GMP Equalisation under the Microscope – Happy Third Anniversary!

Human-ResourcesToday marks the third anniversary of the landmark Lloyds legal case. This case confirmed a legal requirement to provide sex equality in pension scheme benefit structures, and remove any remaining inequality resulting from the way in which Guaranteed Minimum Pensions (GMPs) have to be provided under Government regulations.

Earlier this year, we issued a survey of our clients, to see the progress being made in this direction. Although very few of our clients had completed an exercise to equalise for GMPs, our survey found that

  • The majority of schemes had placed the issue on their “to do” list, and were actively considering their options
  • The great majority of schemes are now paying transfer values on an equalised basis
  • Lack of key data, uncertainty over tax treatment and (to a certain extent) the cost, were cited as reasons why equalisation has not yet been completed.
  • However, the vast majority of schemes had begun to identity data gaps that could impede the GMP equalisation project

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