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

Autumn statement NEW

The Chancellor made a number of pensions-related announcements in his Autumn Statement and supporting documents (read the Autumn Statement Pensions Reform 2023), 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 our article on New UK law passed to tackle economic crime and corporate secrecy). 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 ( see our November 6, 2023 pensions roundup).

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 on The Pensions Regulator blog).

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 further on our September 18, 2023 roundup).

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 at PLSA pension sharing on divorce guidance).

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 (see the HM Revenue & Customs publication).

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 the PASA PDF).

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 (see the Regulated apportionment arrangements post).

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 (further reading on the November 20, 2023 roundup). 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 (see the Corporate Plan 2023 to 2024 from the pensions regulator).
• There is currently no date for revised regulations on changes to the notifiable events regime (read the GOV.UK publication Strengthening The Pensions Regulator's Powers: Notifiable Events (Amendments) Regulations 2021).
• Publication of the revised version of TPR’s General Code is expected soon.

Contact us at pensions.team@allenovery.com for more information or to be added to our mailing list.