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

• Further pension fund reforms announced ahead of Spring Budget 2024
• PPF sets out initial views on how a public sector consolidator could be structured
• TPR blogs about automatic enrolment (“AE”)
• PASA issues paper on CDC developments
• PLSA publishes made simple guide on secure income
• PLSA case studies on incorporating social factors in investment decisions
• PPI publishes report on impact of lifetime provider model
• TPO finds administrator not responsible for member’s opt-out decision

Further pension fund reforms announced ahead of Spring Budget 2024

On 2 March 2024, the Chancellor, Jeremy Hunt, announced a “further step in the government’s plan to boost British business and increase returns for savers” following the Autumn Statement. The reforms include that:

• by 2027, DC pension funds will be required to publicly disclose how much they invest in UK businesses compared to those overseas, and
• schemes performing poorly for savers will not be allowed to take on new business from employers.

Further information about the proposals may be made available as part of the anticipated Spring Budget on 6 March 2024.

PPF sets out initial views on how a public sector consolidator could be structured

Following the DWP’s recent consultation on options for DB schemes, the PPF has published its “early thinking” on how to achieve the DWP’s aims of structuring a public sector consolidator operated by the PPF that should:

• be for schemes unattractive to commercial providers
• ensure the interests of members of transferring schemes are protected
• increase levels of investment in high-growth UK assets, and
• minimise the potential distortion of the market.

The document is intended to “support an effective debate” on the proposals, setting out a design that “has different features to existing, commercial models of consolidation”. The PPF hopes it will be useful in helping others form views in response to the consultation.

TPR blogs about automatic enrolment (“AE”)

On 4 March 2024, TPR published a blog on AE. A refreshed website is intended to “enhance the user experience” for employers submitting their declarations of compliance. Employers are reminded that they must re-enrol eligible staff and redeclare their compliance every three years.

TPR is looking forward to working with the government on changes to extend the AE framework, which are expected “at the earliest opportunity”.

PASA issues paper on CDC developments

On 27 February 2024, PASA published a paper on “initial observations on CDC developments”. It outlines recent policy and regulatory references to CDC arrangements and the likely impact on administration. Draft regulations to extend the CDC framework to allow unconnected multi-employer CDC arrangements are expected this year, and the DWP has suggested that CDC could act as a “lifetime provider” model in the longer term.

PLSA publishes made simple guide on secure income

Published on 28 February 2024, the PLSA’s latest guide in its “made simple” series explains the role secure income assets could play in achieving investment goals, by addressing cashflow challenges, de-risking investment portfolios and enhancing returns through productive finance. The guide is intended to help trustees “navigate the complexities of secure income investments effectively”.

PLSA case studies on incorporating social factors in investment decisions

On 28 February 2024, the PLSA published best practice case studies on how trustees can incorporate social factors into investment strategies. They are intended to support trustees by offering tangible examples which “highlight exemplary investment approaches” that seek to maximise returns and make a positive impact on social factors.

PPI publishes report on impact of lifetime provider model

The PPI published a report on how a lifetime provider model could impact members, employers and industry on 27 February 2024. This follows a call for evidence published by the DWP in 2023. The report sets out:

• the potential impact on key stakeholders of implementing a lifetime provider model
• the issues that may need to be considered if the policy were to be implemented, and
• how the model could fit with other current policy developments, such as pensions dashboards and the new VFM framework.

TPO finds administrator not responsible for member’s opt-out decision

TPO has held that a scheme administrator was not responsible for the financial consequences of a member’s decision to opt-out of the scheme after receiving a letter suggesting that the member was close to reaching the LTA. It was the member’s responsibility to establish their LTA position, which would have included consideration of any benefits held in other schemes.

See our case summary for further details.