Our latest summary of recent UK pensions headlines looks at the Pensions Regulator’s recently published 3-year corporate plan and the possible impact on UK pensions of the 2024 General Election.
General Election 4 July – what does it mean for pensions?
Dave Roberts, Kirsty Cotton | May 24, 2024
The Prime Minister has called the General Election for 4 July and Parliament will be prorogued on 24 May (after which most Parliamentary business ceases) and dissolved on 30 May (after which no Parliamentary business can take place). Policy officials will continue to work on pensions initiatives, for example, expansion of automatic enrolment, value for money, dealing with small pots, consolidation of schemes, rules on surplus distribution, investment in illiquids, expansion of CDC, but it will be for the incoming government to decide the fate and timing of these. The new Parliament will first sit on 9 July, with the State opening of Parliament taking place on 17 July.
Many of these policy developments, and other Mansion House initiatives, have broad cross-party support. For these, the political Party (or Parties) forming the next government is unlikely to change (substantially) their course. Where initiatives are at an advanced stage – notably the new funding Code of Practice and “tidying up” of the legislation in relation to abolition of the lifetime allowance – continued delays in implementation could be problematic.
It is common practice for new governments to hold an emergency Budget shortly after coming into office. However, as the next Parliamentary session will begin 17 July and a summer recess is expected shortly thereafter (this had been scheduled for 23 July), it seems likely that any such fiscal event will not take place until September.
Party manifestos will no doubt be published shortly, at which point the extent to which pension policies (State and private) feature will become known.
The Pensions Regulator publishes its corporate plan for 2024-27
Kirsty Cotton, Janine Bennett, David Robbins | May 15, 2024
On 3 May 2024, The Pensions Regulator (TPR) published its “corporate plan 2024 to 2027. The accompanying press release emphasises what should by now be a familiar message: “At the centre of TPR’s vision is a landscape of fewer, larger pension schemes that deliver good outcomes for savers”.
TPR says that “Industry should expect us to interact with them differently”. This includes “closer engagement” with independent professional trustee firms that have become “more systemically important” as a result of mergers; TPR is developing a framework for their oversight. TPR also signals that its focus will shift from DB to DC (particularly value for money; governance and administration; decumulation; and small pots) after the new DB funding regime has bedded in and indicates that its future work on enforcing the automatic enrolment legislation will involve “reducing interventions among the lower-risk majority of employers”.
Several new guidance documents are planned including:
Consolidation options for DB schemes - including capital-backed journey plans, DB master trusts and superfunds; this should appear later this year
The processes and data submission aspects of the new DB funding Code – also promised for this year
Dashboard compliance
DC decumulation – though this will not be imminent and will be preceded by roundtable discussions; TPR will also begin collecting data on the proportion of savers approaching retirement who are offered two or more options by their scheme besides full/partial cash-out, and
DC value for money – in due course as part of the package associated with proposed legislation.
Other initiatives include:
Collecting new baseline “governance quality” measures
Scoping requirements for a trustee register
Working with DWP on options for mandatory accreditation or authorisation of administrators
Working with the Pension Protection Fund on “expediting schemes unlikely to be able to achieve low dependency or consolidation”
Considering “the broader issue of multiple pots, big or small”
“significant investment” in “data-led” capabilities, including developing systems that support DB data submission and case management, and creating common platforms supporting value for money and oversight of trustees
Embedding a multi-disciplinary team approach (with a pilot for master trusts and value for money work).
