Pensions: Joint DB & DC trustee agenda update - December 2023

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. 

Autumn statement NEW

The Chancellor made a number of pensions-related announcements in his Autumn Statement and supporting documents (read more), with potentially significant long-term impacts for the industry.

The documents published included responses to consultations on (i) DC decumulation, confirming that occupational schemes will be required to provide decumulation services; (ii) deferred small pots, with the government pursuing a multiple default consolidator approach; (iii) options for DB schemes, including proposals to encourage investment in productive finance and in relation to paying surpluses to employers; and (iv) trustee effectiveness, with no immediate proposals for legislation. A call for evidence was published on giving individuals a right to require a new employer to contribute to an existing pension pot – a ‘pot for life’, and on a potentially expanded role for Collective DC (CDC) schemes in future.

Other announcements included that the government is proceeding with legislation to fully abolish the lifetime allowance with effect from 6 April 2024 and there will be a consultation in winter on how the PPF can act as a consolidator for DB schemes that are ‘unattractive to commercial providers’.

ACTION: Review/ask for training on the announcements.

Economic Crime and Corporate Transparency Act (ECCTA) and ban on corporate directors NEW

The ECCTA, setting out reforms intended to prevent criminal use of corporate entities, has been given Royal Assent (read more). Some of these reforms will affect corporate trustees, as well as limited partnerships and Scottish limited partnerships used in certain pension scheme structures.

Alongside the Act, the government has confirmed that it will implement a ban on corporates acting as company directors, although an exception is expected for corporate entities with a ‘legal personality’, where the entity’s directors are, in turn, natural persons (read more).

ACTION: Most measures require secondary legislation and guidance before they come into force. Keep a watching brief on developments.

Dashboards update

The Pensions Regulator (TPR) has published a blog post encouraging schemes to prepare for pensions dashboards and, in particular, to use its dashboards preparation checklist (read more).

ACTION: Continue preparation for pensions dashboards, in line with the guidance.

International data transfers

Schemes that use standard contractual clauses (SCCs) to transfer personal data outside the EEA may need to update their contracts before 21 March 2024. New documents replaced the former SCCs and were required for agreements after 21 September 2022. Transitional arrangements for earlier agreements end on 21 March 2024, meaning such agreements need to be revisited (read more).

ACTION: Make sure any SCCs used by you or your administrator/other third parties are updated.

PLSA guidance on pension sharing charges

The PLSA has revised its guidance on processing pension sharing orders on divorce, with updated suggested ranges for charges (read more).

ACTION: Check your pension sharing processes and charges against the guidance.

Guidance on impacts of the McCloud remedy

HMRC has published guidance on potential impacts for private sector schemes of the remedy for age discrimination in public service pension schemes (the McCloud remedy). If an individual is affected by the remedy and has had a benefit crystallisation event (BCE) in a private sector scheme, this could mean the BCE needs to be revisited (read more).

PASA guidance on DB benefit accuracy

PASA has published guidance aimed at helping DB schemes to ensure benefit accuracy. The guidance sets out suggestions for benefit specifications, data specifications, benefit audit and automation of calculations and processes (read more).

ACTION: Consider the suggested actions.

Updated TPR guidance on regulated apportionment arrangements (RAAs)

TPR has published updated guidance on RAAs. The new guidance is generally consistent with TPR’s existing approach but includes some strengthening of expectations (read more).

ACTION: Consider if contemplating an RAA.

Have your say

  • The government has published a call for evidence on the future of the pension scheme exemption from derivatives clearing requirements (read more). The call for evidence closes on 5 January 2024.

Watch this space

  • The launch of the new DB funding code has been postponed until April 2024 (read more).
  • There is currently no date for revised regulations on changes to the notifiable events regime (read more).
  • Publication of the revised version of TPR’s General Code is expected soon.

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