Pensions Weekly Update – 21 August 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 chancellor has published the terms of reference for the first phase of the pensions review announced recently. The review will focus on defined contribution (DC) pension schemes and the Local Government Pension Scheme (LGPS). The terms of reference provide a focus on consolidation of DC workplace schemes, tackling “fragmentation and inefficiency” in the LGPS through consolidation and improved governance, achieving a greater focus on value and encouraging further pension investment into UK assets. Initial findings are expected to be published later this year. The terms state that ongoing policy development with respect to defined benefit (DB) workplace pensions schemes will remain separate from the review, although we expect that any relevant experience, where DB and DC crossover, will be built on.
The Society of Pension Professionals (SPP) has published a seven-page practical guide to the new defined benefit (DB) funding regime. The aim is to help clarify the requirements that will apply in respect of valuations with an effective date on and from 22 September 2024. The framework for the new funding regime is set out in the Pension Schemes Act 2021. The detail of the new requirements is contained in the Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 which, in turn, are supplemented by the new DB funding code of practice from The Pensions Regulator (TPR). The new regime requires trustees to adopt a strategy for their scheme to be fully funded on a low dependency basis by a specific date, which is no later than the point at which the scheme reaches “significant maturity”. The guide helpfully condenses down 102 pages of the DB funding code of practice.
The Pension Protection Fund (PPF) has issued emails to trustees informing them that most PPF levy mean scores (being the employer covenant strength rating the PPF uses when setting a scheme’s levy) are now available for review on the PPF portal. If an employer’s mean score has not been updated by 31 August, trustees should contact D&B. Trustees are encouraged to check mean scores as soon as possible, and in any event within 28 days of receiving a levy invoice if they wish to challenge a levy calculation because they consider the employer’s rating is too low.
The Pensions Administration Standards Association (PASA) has published guidance on preparing for the change to normal minimum pension age from 55 to 57, on 6 April 2028. The guidance is designed to support trustees and administrators identify affected scheme members, deal with transferred in protected pension ages, understand how the changes are different to the increase in normal minimum pension age from 50 to 55 and to provide a checklist of actions to prepare for the new legislation.
Some sponsored workers in the UK are permitted to work for other employers on a supplementary basis, without having to obtain a new visa. This can be helpful when hiring for hard-to-fill vacancies in the UK, but are there any restrictions that employers should be mindful of? In this podcast , May Cheung and Magali Ferreyra discuss when employers are permitted to hire workers on this basis and what they should be aware of before and during the employment.
Restructuring & Insolvency lawyer, Rachael Markham, considers a recent court decision on when a shareholder is not a shareholder (to paraphrase), in this blog post.