Pensions Weekly Update – 13 March 2024

March 2024
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.

  • The chancellor’s spring budget 2024 contained few surprises on the pensions front.
    • The chancellor confirmed that value for money (VFM) measures will proceed and that the Financial Conduct Authority (FCA) will carry out a consultation in the spring. The VFM framework will highlight where schemes are focusing on short-term cost savings at the expense of long-term investment outcomes, and where schemes’ current size may be preventing them from offering value to savers. The FCA and The Pensions Regulator (TPR) will have power to close a scheme to new employer entrants and, where necessary, wind up a scheme. The FCA’s spring VFM consultation will also include proposals that we covered in our weekly update on 5 March 2024.
    • The local government pension scheme (LGPS) will be subject to both greater asset allocation and data reporting requirements, which will take effect from April 2024. The chancellor said that the government would be considering with the LGPS, the role it could play in unlocking investment in the creation of new children’s homes.
    • In relation to the lifetime provider model for defined contribution (DC) pension schemes, the government has confirmed that it remains committed to exploring this as a long-term option.
    • The triple lock will be retained for state pensions.
    • The chancellor also announced a tweak to legislation in relation to the transfer of collective defined contribution funds.
    • There was no mention of a consultation on regulations to change the trigger age or qualifying earnings band for automatic enrolment, which the government had previously said it would take forward at the earliest opportunity.
  • HM Revenue and Customs (HMRC) issued a lengthy newsletter covering questions connected with the lifetime allowance (LTA) abolition from 6 April 2024. Following the recent enactment of the Finance Act 2024, trustees should check the extent to which scheme rules or scheme benefit designs incorporate the LTA, particularly where benefits are capped at the LTA (where the abolition has not already been addressed) and consider whether further action is or may be needed before 6 April 2024. Seek legal advice where necessary.
  • The Pensions Act 2004 (Codes of Practice) (Revocation) Order 2024 was made on 1 March 2024 and comes into effect on 28 March 2024. It revokes TPR’s codes of practice 1, 4, 5, 6, 7, 8, 9, 11, 13 and 14, including some earlier versions. These codes will be replaced by the new general code of practice.
  • TPR has published a consultation on helping trustees with their statement of strategy, which trustees will need to submit to TPR as part of the valuation process for actuarial valuations dated on and from 22 September 2024. The consultation includes a template statement of strategy, a worked example of how TPR expects maximum affordable contributions to be evidenced and a list of the data and information that trustees will need to complete the template. Consultation closes on 16 April 2024.
  • The Taskforce on Social Factors has produced its final report to assist trustees to take account of social factors when considering environmental, social and governance (ESG) factors. TPR recently urged trustees to think more widely about ESG and highlighted the work of the Taskforce on Social Factors.
  • In our weekly update on 28 February 2024, we noted that the government has published a consultation on options for defined benefit (DB) pension schemes. The consultation considers two themes – refund of surplus (to employers and members) and the establishment of a public sector consolidator for DB pension schemes. In preparing our response to the consultation (which closes on 19 April 2024), we thought it might be interesting and helpful to gather views from our contacts. If you have a spare two minutes, please take our survey.
  • In connection with the proposed refund of surplus measures, and following on from the chancellor’s Mansion House speech last year, HMRC has published an order that will reduce the authorised surplus payments charge for employers from 35% to 25% with effect from 6 April 2024.
  • Have you seen our Spring Hot Topics in Pensions? Our DIY-themed publication contains the tools to help you to construct your own pensions action plan.

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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