Pensions Weekly Update – 14 December 2022

Authors:

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

The pensions dashboards regulations came into force on 12 December 2022. The Department for Work and Pensions (DWP) has issued guidance for trustees and advisers on deferring connection to pensions dashboards. The regulations allow schemes to apply for a deferral of up to 12 months in limited circumstances where the scheme’s data is being transferred to a new administrator or the trustees have entered into a contract that contains an obligation to retender the administration (if the timetable is reasonable and conflicts with the scheme’s staging deadline). Evidence would need to be supplied that complying with the staging deadline would be disproportionately burdensome or would put members’ personal data at risk. Applications should set out the steps being taken to ensure that the scheme can connect to the dashboards digital architecture at the earliest opportunity and what alternative steps have been considered to achieve compliance. An application should be submitted at least two months before the scheme’s staging date, but the DWP advises that applications should be made “as soon as possible”. The last date for submitting an application is 11 December 2023.
The Pension Protection Fund (PPF) has published its levy rules for 2023-24, along with its policy statement. The PPF has confirmed a levy estimate of £200 million for 2023-24, compared with a levy estimate of £390 million for the 2022-23 levy year. The levy scaling factor and scheme-based levy multiplier have been reduced and are confirmed as 0.37 and 0.000019 respectively, with the risk-based levy cap being set at 0.25% of scheme liabilities. The PPF expects that 98% of schemes will see their risk-based levy decrease by more than half. 31 March 2023 remains a key date for submission of PPF levy documents, such as the electronic contingent assets certificate, while hard copy supporting documents must be submitted by 5 p.m. on 3 April 2023.
The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have published an update to their joint regulatory strategy, originally issued in 2018. It highlights areas where TPR and the FCA have worked together to improve savers' retirement outcomes and sets out future objectives. Unsurprisingly, it reflects on actions that each regulator is taking following the recent issues arising out of the liability driven investment market.
In a recent blog, David Fairs, executive director of regulatory policy, analysis and advice at TPR, says that “it is time for trustees to take advantage of available support and guidance to increase their skills in relation to investment decisions and take action to enable pension savers to access the investment opportunities that best support good outcomes – whether in their existing scheme or through consolidation.” Trustees of schemes providing defined contribution (DC) benefits that have less than £100 million of assets must carry out a value for members assessment each year and report on this in the chair's statement. David Fairs says that TPR expects around 1,100 DC schemes, with around 400 linked with defined benefit arrangements, to produce a detailed value for members assessment during 2022, and that trustees who decide their scheme is not providing value for money should seriously consider DC consolidation. TPR also recognises and welcomes the work being done by the Productive Finance Working Group to support trustees and advisers when considering illiquid investments and notes the challenges associated with this.
In a webinar hosted by Barnett Waddingham yesterday, David Fairs said that he hoped the second consultation on the defined benefit funding code would be issued this week (but definitely before Christmas). The suite of materials is apparently over 200 pages, so do not expect it to be light reading. More information about what we can expect is contained in yesterday’s blog.
Would you pair hot chocolate with a chocolate brownie, or is that just too much chocolate? In our Winter Hot Topics in Pensions, we suggest a few treat and drink combinations while updating you on the latest pensions developments. Do let us know if we have missed your favourite treat and drink combo!
Did you see our jingle, in tribute to pensions dashboards? It might ring a few bells!
Look out for our festive quiz, which will be issued this week. There is a prize-winning opportunity!