Pensions Weekly Update

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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 published its annual defined benefit (DB) funding statement for 2024. It is particularly relevant to schemes with valuation dates between 22 September 2023 and 21 September 2024. TPR notes that most schemes will have seen an improvement in their funding position and that around 50% of schemes are expected to be in surplus on the full funding basis, while around 75% of schemes are expected to be in surplus on their technical provisions. TPR says that this tranche of schemes will still be assessed against the current DB code and legislation, but that it would be good practice for trustees to consider the steps they can take now to align (even if broadly) with the new funding code when it is published in the summer. The statement also includes reference to trustees considering alternative endgame options that would be in members’ best interests, including running on a scheme to allow subsequent distribution of surplus among members and employers before wind up, consolidator options and capital backed journey plans.
TPR’s latest blog post provides an update on innovation in the DB market. TPR expects to publish its approach to profit release mechanisms in superfunds soon, and it plans to publish new DB alternative arrangements guidance later this year. TPR also comments that it is looking into a “potential innovation proposition” which would offer defined contribution savers the chance to transfer to a DB pension at retirement. We look forward to hearing more about this.
HM Revenue and Customs (HMRC) has published pension schemes newsletter 159 along with consolidated FAQs in relation to the abolition of the lifetime allowance (LTA). The newsletter provides more guidance in relation to the abolition of the LTA and acknowledges various technical errors in legislation. The newsletter also reminds readers that any event reports for the years 2023-24 onwards, and the pension scheme return for 2024-25, must now be filed on the new Managing Pension Schemes service. Any trustees who have not yet undertaken their scheme migration from the old Pension Schemes Online service to the new service, may want to bump this up on a list of competing priorities. Trustees should note that this is something they must complete themselves; it is unlikely that their scheme administrators will be doing this on their behalf.
The Pensions Dashboards Programme (PDP) gives a comprehensive round up of dashboards progress in its latest report which includes updates from the Department for Work and Pensions (DWP), TPR, the Financial Conduct Authority and MoneyHelper. Among the key messages, the DWP reminds trustees and pension providers of the need to “have regard to” its connections guidance and PDP states that all schemes building a direct route to dashboards connection should contact PDP as soon as possible. The report also contains links to a number of useful resources.
If you recall us mentioning in a previous weekly update a topic that you are interested in, but you cannot remember when, have a look in our pensions thought leadership library, which includes back copies of the weekly update, along with other useful resources.