In the latest edition of our Taylor Wessing Pensions Bulletin we give a snapshot of the latest pensions developments below.

Please get in touch with your usual Taylor Wessing pensions contact if you would like to discuss anything you have seen in the Bulletin.

Various measures potentially affecting both DB and DC schemes announced by the Chancellor

During his 'Mansion House' speech on 10 July the Chancellor made a number of pensions-related announcements aimed at unlocking capital for developing UK industries and increasing returns for pension savers with a view to supporting growth across the wider economy. These included: 

• announcing an industry led compact committing many of the UK’s largest Defined Contribution (DC) pension providers to the objective of allocating at least 5% of their default funds to unlisted equities by 2030
• publishing a joint consultation response with The Pensions Regulator and the FCA on a new Value for Money Framework for DC schemes
• publishing consultation responses on small pots and decumulation, applying additional requirements to DC schemes to support further consolidation
• publishing a consultation response setting out the intention to consult on draft regulations for multi-employer Collective Defined Contribution (CDC) schemes that provide benefits in both the accumulation and decumulation stages
• publishing a consultation response on a permanent superfunds regulatory regime for Defined Benefit (DB) schemes
• issuing a call for evidence on the role of the Pension Protection Fund and the part DB schemes play in productive finance (broadly long term, less liquid assets such as research and development, technology and infrastructure)
• issuing a call for evidence on pension trustee skills, capability and culture, to 'help improve the skills and capability of pension trustees and remove barriers to making investment decisions'
• launching a consultation on accelerating the consolidation of Local Government Pensions Scheme assets.

The potential impact of these measures (which in many cases will require legislative time and detailed work) on pension schemes could be significant, though timing - particularly with the prospect of an election and possible change in government - will be key.

TPR launches its first survey on diversity and inclusion

All trustees of DC and DB schemes are eligible to take part in this anonymous online survey gathering diversity and inclusion data about their scheme’s board.  We understand that postal invitations were sent out at the end of June and e-mail invitations (containing a link to the survey) in July, with a response deadline of 4 August. 

TPR has said that the survey will:

• explore the proportion of trustees with protected characteristics, their academic and socio-economic backgrounds and work experience
• discover trustees’ views on diversity and inclusion in a measurable way allowing for TPR to detect changes in sentiment over time
• understand what diversity and inclusion data about trustees is being recorded by schemes and its intended use
• record actions being taken to ensure diversity and inclusion among trustees in their work and whether information on benefits for savers is being captured
• measure awareness of TPR’s equality, diversity and inclusion (EDI) action plan.

TPR expects to release results from the survey before the end of 2023.

Automatic enrolment changes take a step closer

A private member's bill, introducing  regulation making powers to reduce the lower age threshold for auto-enrolment (currently age 22), and to reduce or repeal the amount of the lower limit of the qualifying earnings band so that contributions are calculated from the first pound earned, has completed its second reading in the House of Lords.  The committee stage will now be on 12 September with a consultation on implementation set for the Autumn.

Abolition of the lifetime allowance – HMRC developments

HMRC has published documentation, including draft legislation, dealing with abolishing the lifetime allowance (following the removal of the lifetime allowance charge for the 23/24 tax year) as announced by the Chancellor in his March 2023 budget.   There are also provisions for a new maximum figure for the tax free pension commencement lump sum ('the lump sum allowance') of £268,275, and for authorised lump sums and authorised lump sum death benefits (the 'lump sum and death benefit allowance') of £1,073,100, to be applied across all the registered pension schemes of a member.  The consultation closes on 12 September 2023.

Update on notifiable events and scheme funding in TPR's 23/24 report and accounts

TPR has published its 22/23 annual report and accounts and, amongst other things, has referred to an 'unavoidable delay' to 23/24 in relation to the notifiable events regime which meant that work on building processes and training programmes in that regard had been put on hold.  It also says that it anticipates completing work on the DB funding code and framework in Spring 2024 (the pensions minister said on 12 July that the Government hopes the next stage in this process will be in the Autumn).