Pensions Weekly Update – 14 June 2023

June 2023
Region: Europe

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.

  • Laura Trott, Pensions Minister, has issued a written statement in relation to the progress of pensions dashboards. In the statement, she says that more time is needed to deliver the dashboards programme. The Pensions Dashboards (Amendment) Regulations 2023 have been laid before Parliament, using the "affirmative" procedure. Changes made to the original regulations mean that the staging dates for connecting to pensions dashboards will now be set out in guidance, which will be subject to industry consultation later in the year. There will, however, be a final connection deadline of 31 October 2026 that will be set out in legislation. The amending regulations also move the calculation date for determining whether a scheme has 100 relevant members so that this becomes the scheme year ending between 1 April 2023 and 31 March 2024.
  • Following the ministerial statement on pensions dashboards, the Pensions Administration Standards Association (PASA) issued a press release setting out its next steps and urging schemes to maintain momentum in preparing to be dashboards ready. PASA has also published its dashboards values guidance, which is intended to supplement the dashboards legislation and government guidance.
  • Louise Davey, Director of Regulatory Policy, Analysis and Advice at The Pensions Regulator (TPR), has published a blog reminding trustees of defined contribution (DC) schemes to regularly review their default strategies and ensure they are fit for purpose. Ms. Davey also flags the importance of communicating with members, and urges trustees to engage with DC savers who are approaching retirement. Annual benefit statements might not accurately reflect recent market movements, so in order to avoid knee-jerk reactions, TPR encourages trustees to take the opportunity to signpost members to appropriate sources of guidance, such as the Money and Pensions Service and Pension Wise.
  • Last week, we noted that the Department for Levelling Up, Housing and Communities had published a further consultation in relation to the McCloud remedy in the Local Government Pension Scheme in England and Wales. Also in connection with the McCloud decision, certain trade unions had made applications for judicial review (which had been joined together) in relation to the way in which the government amended the cost cap mechanism (CCM), to include McCloud remedy costs. Judgment was handed down in March 2023 and the application for judicial review was dismissed. We understand that the Court of Appeal has now granted permission to appeal. The March judgment contains a neat summary of what the CCM actually does: It is a mechanism intended to control changes in costs of public pension schemes and operated by modifying members' benefits (and/or contributions to such schemes) should the measured cost of future pension provision deviate from a set target. The unions' position is that using the CCM in this way is unlawful, it is based on a misconstruction of the Public Service Pensions Act 2013, it is in breach of legitimate expectation and it is indirectly discriminatory. If the Court of Appeal decides that there should have been benefit improvements and that the CCM should not have included McCloud remedy costs, it will be challenging (to say the least) to do that retrospectively at the same time as all the other administration projects underway (McCloud, pensions dashboards, etc.).
  • Last week, we noted that the Retained EU Law (Revocation and Reform) bill had reached the "ping-pong" stage of its passage through Parliament. The list of outstanding issues between the two Houses has been narrowed down and on 6 June, the Lords sent three proposed amendments back to the Commons, which were considered in the House of Commons on 12 June. The Commons disagreed two substantive amendments and agreed one minor amendment. The upshot of this is that the bill will continue to include a schedule listing each piece of retained EU legislation that will be revoked with effect from 31 December 2023, but the Commons have currently rejected each attempt by the Lords to introduce some level of parliamentary scrutiny over the laws that will be revoked, replaced or restated under the bill. A committee will now draw up the reasons for rejecting the Lords' amendments, which will be sent back to the Lords for consideration.

If you would like specific advice on any of these issues or on anything else, please contact a member of our Pensions team.

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