Pensions Weekly Update – 7 February 2024

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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 report outlining how it acted following a major cybersecurity incident last year and worked closely with trustees, administrators and other regulators to assess the risk posed to pension schemes and members. TPR says, “we expect a scheme’s cyber security and business continuity plan to cover a range of scenarios so that, if an incident occurs, trustees will have rehearsed roles, responsibilities, systems and processes to ensure the safe and swift resumption of operations. This includes understanding third-party suppliers’ incident processes, including how and when trustees would be informed of a cyber incident at the supplier.” TPR highlights its cybersecurity guidance, which contains practical steps that trustees can take to meet TPR’s expectations around the assessment and management of cyber-risks set out in the general code of practice.
The Department for Work and Pensions (DWP) reissued its guidance on applying for deferred dashboards connection last week after making a minor terminology change. The recirculation of the guidance generated a few news headlines and led to some speculation that the anticipated dashboards connections guidance might follow soon. Applications to defer dashboards connection (for up to 12 months from 31 October 2026) will only be granted in very limited circumstances. As explained in our weekly update on 16 August 2023, trustees or scheme managers would need to provide evidence that, before 9 August 2023, the scheme had embarked on a programme to transfer their pension scheme data to a new administrator, and/or had entered into a contract containing an obligation to retender the administration. The timetable for the administration transition would need to be reasonable and conflict with the dashboards connection deadline of 31 October 2026 and the evidence would also need to show that compliance would be disproportionately burdensome, or would put the personal data of members at risk. The application to defer must be made by 8 August 2024. However, debate continues as to whether entering a “whole scheme” buy-in contract before 9 August 2023, with a view to later conversion to buyout, will constitute committing to a programme of administration change.
The government has published its annual review of the earnings trigger and qualifying earnings band for the purposes of automatic enrolment in respect of the 2024-2025 financial year. The earnings trigger will remain at £10,000 for 2024-25 and the qualifying earnings band will continue to apply to earnings between the lower earnings limit (LEL) of £6,240 and the upper earnings limit (UEL) of £50,270. Following the enactment of the Pensions (Extension of Automatic Enrolment) Act 2023, the government notes that it intends to carry out a consultation on the detailed implementation around the removal of the LEL, alongside the reduction of the age of enrolment, at the earliest opportunity, and to report to Parliament before using the powers in the act. The government has also published its response to its 2023 call for evidence in relation to its review of the alternative quality requirement for UK defined benefit pension schemes. This review is undertaken every three years. The government has concluded that the existing alternative quality requirements should continue to remain in place without changes at this time.
The Pensions (Special Rules for End of Life) Bill is currently making its way through Parliament. It has had its second reading in the House of Commons and has moved to the next stage, where the wording of the bill will be scrutinised by a committee. The bill is a private member’s bill and, if enacted, would amend the Pensions Act 2004 and Financial Assistance Scheme Regulations 2005. Currently, the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS) may only make terminal illness payments to a member if they suffer from a progressive disease and their death in consequence of that disease can reasonably be expected within six months. The bill, if passed, would extend the period of life expectancy used in the definition of terminal illness by the PPF and FAS from six months to 12 months. Meanwhile, the Finance Bill, which will remove the lifetime allowance, continues to make its way through Parliament.
In our weekly update on 20 December 2023, we noted that the PPF has published its levy rules for 2024-2025. Now is traditionally the time when trustees and employers consider whether to put in place contingent assets or recertify existing contingent assets in order to reduce their scheme’s levy amount. If you would like assistance with this before the PPF’s deadline of 31 March 2024, please get in touch with your usual firm contact.
Our colleague, Georg Serentschy, has written an interesting article on digital networks resilience and security, which looks at cybersecurity on a global scale.