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.
In yesterday’s budget, Chancellor Jeremy Hunt announced a number of key changes to pensions tax allowances. From 6 April 2023:
The Lifetime Allowance charge will be removed, and the Lifetime Allowance will be abolished entirely from April 2024.
The Pension Commencement Lump Sum, for those without protections, will be capped at £268,275 (which is 25% of the current level of the Lifetime Allowance), and it will remain frozen thereafter.
The Annual Allowance will increase from £40,000 to £60,000 (which is its highest level since it was reduced from £255,000 to £50,000 from April 2011).
The minimum tapered annual allowance will increase from £4,000 to £10,000, and the adjusted income threshold will be increased from £240,000 to £260,000.
The money purchase allowance also will increase from £4,000 to £10,000, making it possible for those who have flexibly accessed defined contribution pots to make additional pension savings.
More details about these changes are contained in HMRC’s paper. We can also expect consultations and reforms during this year to encourage pension fund investments in illiquid assets. This communication by our tax colleagues provides a general overview of the budget.
The Pensions Regulator (TPR) has published a blog urging trustees to get in touch with TPR if they have concerns that their sponsoring employer is struggling or if restructuring plans are already in progress. TPR notes the benefit of early engagement with TPR and the Pension Protection Fund (PPF) in such situations and explains how TPR and PPF involvement added value for members of the Arcadia pension schemes.
On 7 March 2023, MP Anthony Browne introduced a Private Members' Bill into the House of Commons with the introduction, "I have a problem, and I am not the only one with this problem. In fact, many millions of people have this problem, too." He went on to clarify that the problem relates to having multiple deferred pension pots, and the bill (which has its second reading on 17 March 2023), would introduce the concept of a "pot for life", where workers would have a single pension pot and remain with the same provider throughout their working life, with their own contributions and their employer contributions being paid into that pension pot. This is intended to build upon the work of the Department for Work and Pensions and the Small Pots Cross-Industry Co-ordination Group, as reported in previous updates. We will monitor whether this bill gains support in Parliament.
On 8 March, the newly formed Department for Science, Innovation and Technology (DSIT) announced the reintroduction of a bill, which is intended to reform the UK’s data protection regime, to Parliament. The new version of the bill is titled the Data Protection and Digital Information (No. 2) Bill and replaces the previous version, which was introduced in July last year. DSIT has explained that the aims of the bill include providing greater flexibility about how organisations comply with the new data laws and reducing the amount of paperwork that organisations will need to complete to demonstrate compliance. These objectives will, however, need to be balanced against the potentially competing aim of ensuring that the new regime maintains adequacy with the EU.
There has been a report in Pensions Age that the new single code of practice will be renamed the General Code and that it is now expected to be published this spring.
If you would like specific advice on any of these issues or on anything else, please contact a member of our Pensions team.