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Pensions: Joint DB & DC trustee agenda update – November 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.

DB Funding Code: latest updates 

The DB Funding Code is due to formally take effect shortly. The Pensions Regulator (TPR) has now published templates for the statement of strategy and an interim consultation response highlighting key changes to the required actuarial and investment information.

TPR will launch a new digital submission platform in spring 2025, for submission of the statement of strategy and other valuation documents. TPR does not expect statements of strategy or other valuation information for in-scope schemes to be completed or submitted prior to the launch of that service.

Action: Read the final draft DB Code and arrange training on the implications for your scheme; review the statement of strategy information.

TPO: expedited decision-making processes 

The Pensions Ombudsman (TPO) has published further details of its expedited decision-making approach and processes.

Updated signposting information for members is also available. 

Action: Note the changes in TPO processes; update standard communications as appropriate.

Proposed VFM framework: FCA consultation

The Financial Conduct Authority (FCA) has consulted on a value for money (VFM) framework for savers in DC default arrangements. The government intends to legislate to apply equivalent measures to trust-based schemes in due course.

The proposed framework has four key aspects – measurement of investment performance, costs and service quality against specified metrics; assessment of performance against other arrangements; disclosure of assessment outcomes; and action to improve schemes that do not provide VFM.

Action: Keep a watching brief as proposals are developed for trust-based DC schemes.

Abolition of LTA: further regulations 

Two further sets of regulations will come into effect in November, making technical changes in relation to the abolition of the lifetime allowance to ensure that the new framework operates as intended. Both sets of regulations will have effect for the tax year 2024/25 and subsequent tax years.

Action: Ensure that processes and, where appropriate, communications are updated in line with the new regulations.

Pensions dashboards update

The Pensions Regulator has published its pensions dashboards compliance and enforcement policy and has again urged trustees to be prepared in good time to comply with their dashboards duties. TPR plans to take a pragmatic approach to enforcement save in cases of wilful or reckless non-compliance, and will focus on the quality of scheme data, robust internal scheme governance, and connection compliance. The policy includes illustrative scenarios of how TPR might deal with breach situations. 

Action: Review the policy and check that steps are in place to maintain an audit trail of your preparations for dashboards compliance.

TPR commentary on ESG matters 

TPR has published findings from its review of how trustees are complying with their ESG duties, based on a review of statements of investment principles (SIPs) and implementation statements. TPR is encouraging trustees to go beyond minimum compliance – for example, providing more detail on voting activity and on wider ESG considerations, such as nature loss and social factors. TPR has also brought together a range of existing guidance and resources on a new landing page to support trustees in meeting its expectation of continuous improvement in this area.

Action: Read the report and consider any potential further actions in this area.

Watch this space

  • The forthcoming Pension Schemes Bill is due to cover measures including the automatic consolidation of deferred DC small pots, the introduction of a standardised VFM test for DC schemes and the framework for commercial DB consolidators (superfunds). It will also introduce duties for trustees to offer decumulation options to members and will remove the need for pension schemes to apply to the County Court to enforce the recovery of an overpayment following a TPO decision.
  • There is currently no date for revised regulations on changes to the notifiable events regime.

Have your say

  • The government is consulting on extending the framework for collective defined contribution (CDC) provision to include non-associated multiple employer CDC schemes (read more). The consultation closes on November 19, 2024.

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