7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• HMRC updates pension scheme administration guidance for tax changes
• Update on implementation of McCloud remedy
• FCA publishes consultation on regulated fees and levies and business plan for 2023/24
• PPF publishes business plan for 2023/24
• Law Commission announces review to examine laws on finances after divorce

HMRC updates pension scheme administration guidance for tax changes

On 6 April 2023, HMRC updated its pension scheme administration guidance to reflect the tax changes announced in the Spring Budget (see our Alert for details). The updates include new pages on taking higher tax-free lump sums with LTA protection, and losing LTA protection.

Following feedback from the industry on a proposed new process, HMRC has confirmed to certain stakeholders (including the Association of Consulting Actuaries) that schemes may continue to use the current HMRC process for dealing with taxation of DB lump sum death benefits and uncrystallised funds lump sum death benefits. Until a longer-term solution is developed to address the full abolition of the LTA from 6 April 2024, HMRC will apply tax at the recipient’s marginal rate (as opposed to imposing an LTA charge) based on information provided by the deceased’s legal personal representatives.

Update on implementation of McCloud remedy

On 6 April 2023, as part of the continued work to implement the McCloud remedy, the Government published a response to its 2020 consultation on amendments to the LGPS statutory underpin. The response confirms the proposals to extend the underpin protection to younger members, with a further consultation expected in the coming months on draft regulations to implement the changes. The Government intends that the final regulations will come into force on 1 October 2023.

Alongside other consultations on implementing the second part of the McCloud remedy (see 7 Days), the Government has also published a consultation in relation to the NHS Pension Scheme, which closes on 6 June 2023.

FCA publishes consultation on regulated fees and levies and business plan for 2023/24

On 5 April 2023, the FCA published its annual fees consultation paper setting out the fees and levies it will charge for the financial year 2023/24 to fund organisations including the FCA itself, the FOS, and MaPS. The consultation closes on 11 May 2023.

Alongside the consultation paper, the FCA published its business plan for 2023/24, the second year of its three-year strategy. The FCA’s work over the coming 12 months will include providing additional resource to support the introduction of the consumer duty from 31 July 2023.

PPF publishes business plan for 2023/24

The PPF has published its business plan for 2023/24, the second year of its Strategic Plan 2022-2025. Its aims include concluding payments for remaining affected members requiring an uplift to their benefits as a result of the Hampshire and Bauer judgments by March 2024.

Law Commission announces review to examine laws on finances after divorce

On 4 April 2023, the Law Commission announced a review to examine the laws on finances after divorce and the ending of a civil partnership. The Law Commission aims to determine whether there are areas of the current legal framework which require reform, and what the options for reform might look like. The areas to be considered as part of the review include orders relating to pensions and whether they are overlooked when dividing the divorcing parties’ assets.

The Law Commission intends to publish a scoping paper in relation to the project in September 2024, which may provide the basis for a full review. No changes are therefore imminent.