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

• PPF publishes levy rules for 2024/25
• Regulations made to bring parts of the Retained EU Law Act into force
• TPO publishes annual report and accounts
• PASA updates its jargon buster guide
• FCA writes to investment platforms and SIPP operators about interest earned on customers’ cash balances
• Voluntary code of conduct for ESG ratings and data products providers
• Court of Appeal considers tax status of payment made to employees as part of pension change package

PPF publishes levy rules for 2024/25

The PPF published its levy policy statement with final levy rules for 2024/25 on 14 December 2023. The policy statement confirms that the total amount of PPF levy charged will reduce from £200m for 2023/24 to £100m for 2024/25. As a result, the levy is expected to reduce for almost all levy payers.

The PPF’s ability to reduce the levy further is constrained by legislation. Most respondents to the PPF’s consultation felt strongly that legislation should be changed as soon as possible to allow a further levy reduction in the future. The DWP “will consider the points raised” and expects to legislate “as soon as parliamentary time allows”.

Regulations made to bring parts of the Retained EU Law Act into force

Regulations have been made to bring parts of the Retained EU Law (Revocation and Reform) Act 2023 into force. Provisions of the Act revoking specific secondary legislation will come into force immediately before the end of 2023. Certain other parts of the Act, including the abolition of general principles of EU law, will come into force on 1 January 2024. Regulations will preserve the effect of certain EU-derived pensions case law (see 7 Days).

TPO publishes annual report and accounts

On 14 December 2023, TPO published its annual report and accounts for 2022/23. Demand for TPO’s services has risen, with the number of complaints received increasing from 6,216 in 2021/22 to 7,280 in 2022/23. More cases were closed than received, with an increase of 49% more cases closed compared to the previous year “due to the development of new ways of working that drove efficiencies and some additional funding” to provide additional resource. However, waiting times “continue to be a significant issue” and addressing these is a priority for TPO.

PASA updates its jargon buster guide

On 14 December 2023, PASA published an updated version of its digital jargon buster guide, outlining several key technology terms, their relevance to pensions and examples of how the technology can be used. The updates relate to the development of AI tools since the first guide was published in September 2021. PASA expects to provide further updates in 2024 as AI models and regulation continue to develop.

FCA writes to investment platforms and SIPP operators about interest earned on customers’ cash balances

On 12 December 2023, the FCA published a “Dear CEO” letter to investment platforms and SIPP operators setting out its concerns about the way interest earned on customers’ cash balances is dealt with. A survey of firms found that the majority retained some of the interest earned on cash balances, which “may not reasonably reflect the cost to firms of managing the cash”. Firms are expected to ensure that their retention of interest on cash balances provides fair value and is understood by consumers in line with the consumer duty.

Voluntary code of conduct for ESG ratings and data products providers

The ESG Data and Ratings Code of Conduct Working Group has published its voluntary code of conduct for ESG data and ratings providers, following a consultation earlier in 2023.

HMT consulted earlier this year on whether ESG ratings providers should be regulated by the FCA, and is considering the feedback received. In the meantime, the FCA encourages all ESG data and ratings providers to engage with and sign up to the code, and considers that the code “will provide a benchmark” for any providers that fall outside the scope of the potential future regulation.

Court of Appeal considers tax status of payment made to employees as part of pension change package

The Court of Appeal has held that a “Facilitation Payment” made to employees as part of a package including adverse changes to future pension arrangements comprised earnings “from” their employment, which attracted both income tax and NICs.

While it can be difficult to determine whether a payment is “from” employment and, as such, subject to tax and NI, this decision indicates that payments in relation to changes to future employment terms are likely to be taxable. See our case summary for details.

Best wishes for the festive season and 2024

This is our last 7 Days of 2023. The first edition of the new year will be published on Tuesday 2 January 2024.

With best wishes for 2024 from all at Sackers.