Pensions: Joint DB & DC trustee agenda update - April 2024

Welcome to our monthly update on current legal issues for trustees of DB and hybrid pension schemes, designed to help you stay up to date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We also have a separate DC-only briefing.

General Code ‘go live’ date: 27 March 2024

The message from the Pensions Regulator (TPR) is that the General Code presents ‘an opportunity for governing bodies to make sure their schemes meet the standards of governance we expect.’

Trustees should be familiar with the Code as part of their trustee knowledge and understanding and ensure that they have all the elements of an ‘effective system of governance’ (ESOG) in place. In due course, schemes will need to carry out an ‘own risk assessment’ (ORA) of how well the ESOG is working (read more).

ACTION: Review the Code and take action to address any gaps; identify the ORA deadline applicable to your scheme.

Lifetime Allowance abolished from 6 April 2024

From 6 April 2024, the lifetime allowance will be replaced by a new framework featuring two key allowances: the lump sum allowance and the lump sum and death benefit allowance. Regulations have been published making technical changes to the legislation and introducing a five-year override in cases where scheme rules impose a benefit cap by reference to the lifetime allowance (read more).

ACTION: Update member communications as appropriate for use from 6 April 2024.

TPR’s view on wider ESG considerations NEW!

TPR is encouraging trustees to consider their approach to managing wider environmental, social and governance (ESG) risks and opportunities – for example, by familiarising themselves with recommendations from the Taskforce for Nature related Financial Disclosures and the work of the UK Transition Plan Taskforce (read more). TPR’s latest blog post also highlights the work of the Taskforce for Social Factors, which has published new guidance (read more).

ACTION: Read TPR’s blog post and consider arranging training on the resources signposted.

Recovering overpayments: TPO update

Scheme processes for recovering overpayments will have to change following a recent court ruling that the Pensions Ombudsman (TPO) is not a ‘competent court’. Schemes that have a TPO determination in their favour will now require an order from the county court before they start recouping money in instalments from ongoing pensions. TPO has issued a statement providing practical details about the process (read more).

ACTION: Update scheme processes; contact your usual adviser for further support.

TPR guidance: private market investments

TPR has issued guidance designed to help trustees who are considering investing in assets such as private equity/debt, private real estate or infrastructure and natural resources. 

The guidance provides a high-level overview of structures providing access to private market assets, the opportunities and risks of these investments and relevant legal and governance considerations. It also sets out some DB- and DC specific issues for trustees of relevant schemes to consider, and links to additional resources (read more).

ACTION: Trustees considering private market investments should consider the guidance and take relevant advice.

Have your say

  • The Pensions Regulator is consulting on the DB funding statement of strategy, including the proposed form of the document and the type and extent of information that will need to be submitted. The consultation closes on 16 April 2024 (read more).
  • The government is consulting on changes to surplus repayment rules for DB schemes and the creation of a DB consolidator. The consultation closes on 19 April 2024 (read more).

Watch this space

  • Publication of the final version of the new DB funding code is now expected in summer 2024. The new framework is expected to apply to scheme valuations on and after 22 September 2024.
  • There is currently no date for revised regulations on changes to the notifiable events regime (read more).

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Content Disclaimer
This content was originally published by Allen & Overy before the A&O Shearman merger