Pensions Weekly Update – 10 March 2021

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Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.

In a statement made on 2 March 2021, Pensions Minister Guy Opperman confirmed that the government is now progressing the secondary legislation required to bring into force the various measures introduced by the Pension Schemes Act 2021. In respect of most of the new powers being made available to The Pensions Regulator, the Minister confirmed that these would be consulted on during the spring and would commence in the autumn, along with the new criminal offence measures. The exception to this relates to the change to the notifiable events regime and the introduction of the new “accompanying statement” (formerly referred to as a “declaration of intent”). Regulations addressing these are due “later this year”.
On 10 June 2019, the Competition and Markets Authority issued its final order in relation to its investigation into the investment consultancy and fiduciary management market. Time flies and the next deadline under the order is looming. If a scheme had 20% or more of assets under fiduciary management on 10 June 2019, which were not the subject of a competitive tender exercise, trustees must arrange a competitive tender exercise before the later of 10 June 2021 or five years from the commencement of the first arrangement. Broadly speaking, a competitive tender exercise is where the trustees have used reasonable endeavours to obtain three bids from unrelated fiduciary management providers who are independent of each other. If you need support on assessing whether your investment arrangements are compliant, we can help.
The government has published its response to its consultation on options for increasing the general levy on registered pension schemes for 2021, 2022 and 2023. It has concluded that it will follow the option it preferred in the original consultation – an increase in the levy rates and the simultaneous introduction of four separate sets of rates for: defined benefit (DB) schemes, defined contribution (DC) schemes other than master trusts, master trusts and personal pension schemes. The response to consultation sets out the revised rates in detail but, as a general guide, the original consultation indicated for 2021 there will be a 10% increase in rates for DB and DC schemes, and a 5% increase in rates for master trusts and personal pension schemes (with higher increases scheduled for 2022 and 2023).
HMRC has issued pension schemes newsletter 128. Of particular note is that certain temporary changes introduced following the onset of the pandemic have been reviewed and extended until 30 June 2021. These include, among other things, the easements in relation to rent and loan payment holidays and accounting for tax return submission and payment delays. The newsletter also reports on the Spring Budget and notes that legislation will be introduced in Finance Bill 2021 so that the lifetime allowance (LTA) will not increase in line with the consumer price index for tax years 2021/22, up to and including 2025/26. The LTA will remain at £1,073,100 for those years.
Also in the Spring Budget, the chancellor announced that there would be a consultation on whether certain costs within the charge cap affect the ability of pension schemes to invest in a broader range of assets. Our tax colleagues have produced a general budget alert. The 130% “super deduction” will be of interest to pension trustees. This provides a big incentive for businesses to invest in plant and equipment over the next two years, which might have a knock on effect on an employer’s willingness/ability to clear pension deficits. Trustees should be prepared for employers wishing to take advantage of the new “super deduction” and seek covenant and legal advice as appropriate.