Spring is here and along with it comes a bumper update from us on all the latest pensions law news.
The announcements have been coming thick and fast over the past month. The Spring budget brought few surprises from the pensions perspective but progress on the Mansion House reforms continues. The next stages of implementing the new Value for Money requirements for DC schemes have now been announced, and the DWP consultation on options for DB schemes was published on 23 February.
This month we’ve also seen preparations for the new DB Funding & Investment Strategy Regulations coming into force continue, structural changes announced at the Pensions Regulator (“TPR”), phased implementation of changes at Companies House and a rare victory for small schemes in the response to the DWP consultation on the General Levy.
You’ll find articles about all of these and more in this month’s Pensions Law Update. We hope you enjoy this newsletter – as always, if you have any questions, or would like to discuss anything you’ve read, please do get in touch.
Reform
Reform of the UK pensions market clearly remains high on the Agenda for the government. The DWP has published its consultation on options for DB schemes – a follow up to last year’s call for evidence – looking at treatment of surpluses and the form of a potential public sector consolidator. We will be responding to the consultation and welcome any feedback you may have that you would like to see included.
On Thursday 14 March Head of Pensions Richard Knight spoke (together with representatives from the DWP) at an XPS event to discuss the proposal for surplus in particular, as well as the new DB Funding & Investment Strategy Regulations. XPS are also running a survey to gather views on running on schemes to generate surpluses – click here to participate.
On the topic of surplus, there was an interesting development in the USA late last year, when IBM re-opened its closed DB scheme in order to make use of a significant surplus. Amy Davies looks at the IBM approach and considers whether UK schemes could follow suit.
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From the DC perspective, in the days leading up to the Spring budget, Jeremy Hunt had already announced measures designed to simultaneously drive investment in UK plc whilst encouraging market consolidation (by closing schemes generating poor returns to new business).
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New DB Funding and Investment Strategy regime
Last month we notified you about the publication of the final DB Funding and Investment Strategy Regulations. This month we bring you an in depth look at the new Regulations, and identify what actions schemes, their advisors and employers should be taking now to prepare for the first valuations under the new regime in the Autumn.
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Since publication of the article above, TPR has given an update on the accompanying DB Funding Code, which it is expecting to publish “this summer”. Parameters for using the “fast track” for valuations should be published around the same time. For more details, please see our update.
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And on 5 March, the consultation TPR promised us on the statement of strategy (which schemes will now be required to produce) was published. Mairi Carlin looks at the proposals on which TPR is seeking input.
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Our lead Pensions Lawyer in Scotland Helen Woodford and Solicitor Sophie Kirk delivered an update on the new requirements to the PMI last Thursday in Edinburgh.
Pensions Ombudsman upholds complaint against professional trustee in relation to investment decision
In this decision involving a SSAS the Ombudsman reiterated the established principle that professional trustees must take an active role in relation to investment decision-making (and not simply follow the decision of a member-trustee). However, as Partner Alice Honeywill finds, he also went further and suggested the professional trustee had a duty to educate the member trustee.
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General levy – consultation responses deliver policy change
In a period where the industry is buzzing with consultations and proposals for change, Alice Honeywill looks at the DWP’s response to the consultation on changes to the General Levy and the power of engagement.
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Focus on ESG
How can trustees take account of climate change and sustainability whilst meeting their fiduciary duties? Director and ESG lead Kate Granville Smith considers a helpful recent report by the Financial Markets Law Committee.
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TPR has published a blog post on how nature and social risks will be the next focus areas for schemes’ ESG reporting – we consider what actions schemes can take now to prepare.
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Changes at Companies House – how do they affect corporate trustees?
Under the Economic Crime and Corporate Transparency Act 2023, the role of Companies House is changing and so are the requirements for the companies it regulates. We look at the new requirements, and what corporate trustees need to know.
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Structural changes at TPR
Responding to the changing marketplace, TPR has announced a restructuring of its functions – as Clive Pugh reports, the aim is to enable TPR to respond more swiftly to “address compliance failures and market-wide risks while being more dynamic in our industry engagement and bringing innovation to the fore”.
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Abolition of the Lifetime Allowance
Last month, we brought you our legal update, looking in detail at the abolition and identifying key actions for trustees and administrators ahead of the abolition coming into effect on 6 April 2024. In a development that will bring welcome certainty for schemes preparing for the change, the Finance Act 2024 received Royal Assent on 22 February 2024.
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Team news
Ending the newsletter on a high, this month we were delighted to announce that Pensions team Director Chris Brown will be promoted to the partnership with effect from 1 May 2024. Congratulations Chris!
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