Legislative and regulatory developments
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The following are forthcoming developments with known or expected dates: |
KEY DATE |
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DC illiquid investment Regulations require DC scheme trustees to disclose and explain:
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1 October 2023 to 1 October 2024 |
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See WHiP Issue 102. |
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Pensions Regulator general code of practice and own-risk assessments The Pensions Regulator has consulted on a consolidation and update of ten of its current codes of practice, with more to follow. The outcome has been awaited for some time. The new 'general code' will also include new content on scheme governance: this relates to the broadening of existing internal controls requirements to require occupational pension schemes to "establish and operate an effective system of governance including internal controls", which must be "proportionate to the size, nature, scale and complexity of the activities of the occupational pension scheme". Schemes with 100 or more members will need to check existing policies or introduce new policies in relation to various governance matters. Trustees of these schemes will also be required to carry out and document an "own-risk assessment" of their system of governance. See WHiP Issues 88 and 91. |
Autumn 2023 (?) (but with a time period to be confirmed for schemes to comply with the new scheme governance content) |
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Retained EU law (Revocation and Reform) Act 2023 Among other things, this Act removes the supremacy of retained EU law over conflicting domestic law, sets rules for the courts to follow when considering departing from previous decisions on EU law, and gives the Government wide powers to revoke or amend retained EU law. These powers may be used to ensure that judgments on points of EU law remain applicable or to override them. Regulations to retain some EU caselaw will shortly be made See WHiP Issue 103 and the next issue. |
31 December 2023 |
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Pension Sharing on divorce – charges guidance New PLSA guidance applies on recommended charge rates for dealing with pension sharing on divorce. See the next issue of WHiP. |
2 January 2024 |
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London Inter-Bank Offered Rate (LIBOR) and synthetic LIBOR settings The final LIBOR rates for most currencies and durations were published on 31 December 2021. A statutory rate known as "synthetic" LIBOR continued to be temporarily published for certain LIBOR settings, giving schemes additional time to transition their LIBOR transactions (such as interest-rate derivatives) to a replacement rate, such as compounded SONIA (the sterling overnight index average). The publication of the 1 and 6-month synthetic sterling LIBOR settings ceased as of 31 March 2023. The 3-month synthetic sterling LIBOR setting is expected to cease on 28 March 2024. The overnight and 12-month US dollar LIBOR settings ceased permanently after publication on 30 June 2023, and ICE Benchmark Administration Limited will continue publication of the 1, 3 and 6-month US dollar LIBOR settings on a synthetic basis from 1 July to 30 September 2024. |
28 March 2024 30 September 2024 |
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DB scheme funding and investment DB schemes will be required to have a "funding and investment strategy" for ensuring that benefits can be provided over the long term. After determining or revising such a strategy, trustees will have to prepare a "statement of strategy" which will normally have to be agreed with the sponsoring employer. All valuations will have to be submitted to the Pensions Regulator as soon as reasonably practicable, whether or not the scheme is in deficit. Details will be in regulations, on which a public consultation has been held. See WHiP Issue 97. To complement these changes to the statutory scheme funding regime, the Pensions Regulator has consulted on a new Code of Practice and a 'fast-track' mechanism for schemes able to meet certain criteria based on tolerated levels of risk. See WHiP Issue99. The Work and Pensions Select Committee has recommended that work on the regulations and code of practice be halted until the impact on economic stability and open DB schemes has been fully assessed. The Government's response is awaited. See WHiP Issue 103. |
April 2024 (?) |
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Lifetime allowance to be abolished The lifetime allowance charge was abolished from 6 April 2023. The Government intends to repeal and amend the remainder of the lifetime allowance legislation with effect from 6 April 2024. It has proposed a new allowance-based regime in draft legislation but the drafting raises substantial issues. In the meantime, the lifetime allowance and protections remain in place for limited purposes. See WHiP Issues 101 and 104. |
6 April 2024 |
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Tax relief – 'net pay' schemes Tax relief disadvantages are being addressed for low earners in schemes (generally occupational pension schemes, including some master trusts) where the "net pay" tax relief system is operated. See WHiP Issues 97 and 101. |
From April 2024 |
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Automatic enrolment changes The Government has proposed significant changes to the scope of the automatic enrolment duties, including extending automatic enrolment to 18 to 21 year olds and removal of the lower pensionable pay threshold, subject to finding ways to make these changes affordable. A new statute introduces powers to make the changes but there is no new indication as to the timing of implementation. See the next issue of WHiP. |
Mid-2020s |
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EMIR/UK EMIR: mandatory clearing exemption for pension schemes Until now, certain pension schemes have benefited from an exemption from the obligation to clear certain classes of OTC derivatives contracts under each of EMIR and UK EMIR while clearing solutions for pension schemes have been considered. The European Commission's EMIR exemption for EEA schemes expired on 18 June 2023. The exemption under UK EMIR has been extended to 18 June 2025. Schemes should ensure they are familiar with the clearing requirements and are operationally ready to begin clearing derivatives transactions should they exceed the various volume thresholds for clearing. Schemes facing EEA bank counterparties should ensure they are in a position to either close-out their in-scope derivatives (or novate such derivatives to UK bank counterparties) or exclusively face UK bank counterparties for in- scope derivatives. |
18 June 2025 (UK) |
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Data transfers to the EU The European Commission's June 2021 adequacy statement regarding protections for personal data transferred from the EU to the UK expires after four years but can be renewed. See WHiP Issues 86 and 90. |
June 2025 |
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Pensions dashboards The timetable for pensions dashboards had been set, requiring schemes to connect and provide data on a staged basis, and the public launch had been expected to be in late 2024. The programme is currently, however, delayed and new expected connection dates are awaited. These will be set out in guidance but there is an ultimate legal requirement in regulations to connect by 31 October 2026. See the next issue of WHiP. Schemes have been urged to continue to prepare for connection. See our updated article 10 actions for getting to grips with pensions dashboards. |
31 October 2026 (but with guidance to set earlier expected connection dates) |
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Normal minimum pension age to be raised to 57 The normal minimum pension age for registered pension schemes will be 57 (rather than 55) with effect on and from 6 April 2028, with some protections for members with existing rights to draw benefits earlier. Trustees should inform members at the next opportunity of any change to the age from which they are able to access benefits under the scheme rules. See WHiP Issue 94. |
6 April 2028 |
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RPI reform The UK Statistics Authority is expected to align the Retail Prices Index with the Consumer Prices Index including owner-occupied housing costs (CPIH) when it is able to do so unilaterally, which is from February 2030. The Chancellor of the Exchequer declined to consent to earlier reform and a judicial review challenge failed. See WHiP Issues 78, 81, 86 and 98. |
February 2030 |
Ongoing and recurring events
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The following are events that are ongoing or recurring: |
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Automatic re-enrolment Every three years, an employer must carry out an exercise to re-enrol, into an automatic enrolment scheme, eligible jobholders who opted out after they were automatically enrolled. This duty first arises three years from the employer's staging date, when automatic enrolment was first required, and there is a six month window around that anniversary during which the exercise must be carried out. It must then be repeated every three years. See our briefing note Automatic re-enrolment. |
Every three years |
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State pension ages rising State pension age for both men and women is rising to age 68 by 2046 but this is due to be reviewed after the next general election. See WHiP Issue 102. The increase from 66 to 67 has been brought forward by eight years, to take place between 2026 and 2028. See our briefing note Bridging pensions – state pension age issues, on the issues that rising state pension ages can cause for schemes that attempt to integrate with the state pension. |
Until 2046 (with implications already for schemes with bridging pensions or state pension offsets) |
Expected developments with no confirmed date
The following are expected legislative and regulatory developments for which there is no confirmed date:
Options for DB schemes
The Government wants more productive investment from DB schemes, including to assist with economic growth and infrastructure projects. It has called for evidence on how to encourage this, including by the possible relaxation of rules on accessing surplus and by enabling more consolidation of schemes. This might involve a public sector consolidator, which could be an expanded version of the Pension Protection Fund. See WHiP Issue 104.
DB consolidator schemes
The Government has consulted on proposals for legislation on the authorisation and supervision of DB consolidator schemes, or "superfunds", which are intended to operate in some circumstances as an alternative to buy-out. Legislation will be put forward "when Parliamentary time allows", including 'gateway' criteria for schemes to be able to access a consolidator scheme. In the meantime, Pensions Regulator guidance applies and guidance on alternative models is expected later in 2023. See WHiP Issues 74, 82, 85, 88 and 104.
Collective DC expansion
The Government intends to broaden collective money purchase pension provision beyond single or connected employer schemes. There will be a consultation in autumn 2023 on allowing multi-employer "whole-life" schemes (i.e. schemes providing accrual and paying benefits). Decumulation-only arrangements may be permitted in the future. See WHiP Issues 100 and 104.
DC value for money
The Government, Pensions Regulator and FCA have confirmed a new framework on metrics, standards and disclosures for value for money assessments in DC occupational pension schemes and personal pensions. DC scheme trustees and independent governance committees of workplace personal pension schemes will be required to assess in detail, compare and disclose the value for money that their scheme provides. This will involve much more than consideration of just costs and charges. The Government and regulators aim to help trustees to make more informed investment and governance decisions and employers to compare options for pension provision, whilst also driving competition. This is not expected to take effect until the mid-2020s. See WHiP Issues 100 and 104.
DC decumulation help
The Government intends to impose a duty on DC schemes to offer decumulation products or services meeting the needs of a generality of their members, to include a collective DC option (see above). Master trusts may be subject to this requirement first, with Nest regulations needing to be amended to allow it to offer a range of decumulation options. See WHiP Issue 104.
Small DC pots
The Government has settled on the 'multiple default consolidator' model for dealing with deferred DC pots of less than £1,000. A small number of authorised schemes, including master trusts, will act as consolidators. The Government is consulting on aspects of how this will operate. See WHiP Issues 101 and 104.
DC chair's statements
The Government is discussing potential improvements to the DC chair's governance statement requirements with the Pensions Regulator and industry representatives. The value for money framework proposals (see above) are, however, expected to result in the chair's statement requirements being phased out. The Government is also considering giving the Regulator discretion over fines for non-compliance, which are currently mandatory. See WHiPIssue 88.
Trusteeship
The Government has issued a call for evidence on trustee skills and capability, the role of advice and barriers to trustee effectiveness. This could result in requirements for trustee registration, a trustee accreditation framework, and particular requirements for professional trustees. See WHiP Issue 104.
GMPs and sex discrimination
Judgments in the Lloyds Banking Group case have provided some clarity about the need to equalise benefits to remove the discriminatory effects of GMPs and about the obligations on trustees as regards past transfers-out. See our briefing notes GMP equalisation: court ruling and GMP equalisation – where are we now?.
The Government previously stated its intention to legislate to remove the need for a claimant to point to a comparator of the opposite sex in order to establish unlawful discrimination. Implementation was delayed, however, pending the Lloyds litigation and consideration of a combined value-equalisation and GMP-conversion process. There has been no news on progress in this area.
HMRC published newsletters in February 2020, July 2020, April 2022 and June 2022 on tax issues relating to GMP equalisation adjustments (respectively on: dual records adjustments to pension benefits; adjustments to lump sum payments; transfer corrections and GMP conversion; and tax on pension arrears and interest).
An industry group has been considering issues for trustees and administrators and has issued guidance notes on various aspects.
A private member's bill on GMP conversion, intended to make it easier to use that facility alongside equalisation, has been passed. The substantive legislative changes are left to regulations, for which no date has been indicated. See WHiP Issues 93 and 95.
Notifiable events
There is expected to be a new, more intrusive regime for certain notifiable events (i.e. events that have to be notified to the Pensions Regulator) that occur in relation to scheme employers. The key detail will be in regulations, which are long delayed, but new notifiable events may include the sale of a material proportion of the business or assets of a scheme employer which has funding responsibility for at least 20% of the scheme's liabilities and the granting of security on a debt with priority over debt to the scheme. Notifications under the new regime will also have to be given to the scheme trustees and may need to be given earlier than at present.
Regulations can impose the new duties on not just the scheme employer but also a person connected or associated with it, or any other specified person. Notifications will have to be accompanied by a statement. It is expected that this will need to set out the implications for the scheme of the proposed transaction (or other corporate activity) and how any risks will be mitigated.
See our briefing note 'Pension Schemes Act 2021: what happens next?' and WHiP Issue 91.
Amendment power case
The BBC is appealing the High Court's ruling on the interpretation of its DB scheme amendment power, regarding the ability to change member contributions and future service benefits, including the power to end accruals (though specific proposals have not yet been announced). The amendment power requires, among other options, that the scheme actuary certifies that the amendment does not substantially prejudice the interests of active members. See WHiP Issue 104.
Case on section 37 / regulation 42 certificates
In a case involving a Virgin Media group pension scheme, the High Court ruled on the consequences of a deed amending a contracted-out pension scheme not being accompanied by the actuary's confirmation required under section 37 of the Pension Schemes Act 1993. The decision is being appealed. See WHiP Issue 103.
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