Pensions Weekly Update – 26 July 2023

July 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.

  • Chancellor Jeremy Hunt’s Mansion House speech on 10 July 2023 (and the vast quantity of accompanying documents) launched a wide-ranging review of pension policy on a disparate range of topics. Our pension partners have analysed the detail of the reforms and summarised the key takeaways.
  • HMRC has published draft legislation to be included in the Finance Bill 2024, along with updated policy papers, that cover the abolition of the lifetime allowance (LTA) and amendments to the relief at source legislation (which is purely for administrators). The abolition of the lifetime allowance has generated some complicated draft legislation and is intended to come into force from tax year 2024-25. It includes amendments to the tax treatment of lump sums and lump sum death benefits in the absence of the LTA. The draft legislation also clarifies how the different types of protection will apply. HMRC’s pension schemes newsletter 152 includes a summary of the draft legislation.
  • In our weekly update of 8 March 2023, we noted that the Pensions (Extension of Automatic Enrolment) (No. 2) Bill is making its way through Parliament. It has been through the House of Commons and has had its second reading in the House of Lords. The House of Lords committee stage, where the bill will be considered line by line, is scheduled for 12 September 2023. The bill is a private member’s bill that has government support. It would introduce powers to allow the Department for Work and Pensions (DWP) to make regulations to (1) lower the age for automatic pensions enrolment from the current age of 22, and (2) lower or reduce the lower earnings limit for “qualifying earnings”. While there is no proposal to lower or remove the £10,000 earnings trigger in the bill, Baroness Altman, who introduced the bill into the House of Lords, recognised that the removal of the trigger could be achieved at some other time. Even without that change, the impact assessment estimated that “if in force in 2022-23, the combined proposals would increase total pension saving by £2 billion. Of this, £0.9 billion would be paid in employee contributions, £0.8 billion would be paid in employer contributions and £0.2 billion would be paid in income tax relief on employee contributions.”
  • On the topic of pensions dashboards, The Pensions Regulator has updated its initial guidance on failing to comply with dashboards duties, to include information on how trustees and scheme managers will be expected to demonstrate that they have complied with the (yet to be issued) guidance on staging dates. Meanwhile, the Work and Pensions Committee recently examined a number of key witnesses to establish the reasons behind the pensions dashboards reset. Witnesses included Simon McKinnon, the former chief digital and information officer at the DWP, who was confirmed as the new independent chair of the Pensions Dashboards Programme board. Separately, the House of Commons Library has issued a briefing paper on pensions dashboards, which could be a useful reference document for anyone who needs more background on this important development.
  • Finally, as a follow up to our insight on Virgin Media v NTL Pension Trustees, in which Mrs. Justice Bacon ruled that amendments to benefits in schemes that were contracted out on the reference scheme test basis between 6 April 1997 and 5 April 2016 are void if they were made without written confirmation from the scheme actuary that the scheme would continue to meet the reference scheme test, we understand that the judge has recently granted Virgin Media permission to appeal her decision in that case.

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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