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 Regulator (TPR) has issued a statement summarising a speech given by Nausicaa Delfas, the new chief executive officer of TPR, calling on the pensions industry to work together to enhance the pensions system, support innovation in the interests of savers and protect savers’ money. Ms. Delfas focuses on value for money and stresses that TPR will actively pursue consolidation of underperforming schemes where appropriate. Governance of trustee boards is also key. Ms. Delfas says, “in order to achieve all of the ambitions here, fundamentally we believe that every trustee body should include someone who meets professional standards.” The press statement links to Ms. Delfas' full speech.
The Tony Blair Institute for Global Change has produced a paper entitled Investing in the Future: Boosting Savings and Prosperity for the UK. The paper contains some radical ideas for the pensions industry, including expanding the remit of the Pension Protection Fund (PPF) into a super-consolidator of pension funds (to be called GB Savings). The proposal is that the sponsors of the smallest defined benefit (DB) pension funds should be offered the option to transfer their funds to the PPF on a "benefit-preserving" basis, without the need for the sponsor to fail first. After this, similar PPF models would then be rolled out on a regional basis to absorb the remaining DB funds, defined contribution (DC) funds, the LGPS and, potentially, the unfunded public sector schemes. The proposal is that this would create "half a dozen global-scale (£300 billion to £400 billion apiece), professionally managed, long time horizon, diversified funds". In order to encourage sponsors to transfer their pension funds to the PPF, only those pension schemes that meet minimum requirements would continue to benefit from tax savings: a pension scheme would have to meet a minimum fund value of £25 billion and invest a minimum proportion of its assets (the paper suggests 25%) in UK companies and qualifying infrastructure assets.
The government has published its outcome of consultation on the Long-term Investment for Technology & Science (LIFTS) initiative. The aim of this initiative is to establish new investment vehicles to "crowd-in" investment from institutional investors, such as DC pension funds, to the UK's most innovative science and technology companies. The government says that it has worked closely with the British Business Bank to develop the design of the LIFTS initiative. The government is now taking the next step, with the British Business Bank inviting managed fund proposals from DC pension schemes and authorised asset managers that have at least one DC pension scheme willing to support the proposal by investing.
HMRC has published a technical consultation on draft tax regulations that set out additional changes to the tax rules in order to accommodate age discrimination remedies for public sector pension schemes. The draft regulations give administrators details of the additional tax changes they will need to consider, and provide members with details of the approach that will be taken to any annual allowance, lifetime allowance or unauthorised payments tax charges during the tax years 2019-2020 to 2022-2023. Consultation closes on 19 June 2023.
Finally, please note that from 19 June 2023, TPR's postal address will be Telecom House, 125-135 Preston Road, Brighton BN1 6AF.
If you would like specific advice on any of these issues or on anything else, please contact a member of our Pensions team.