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

• TPR consults on DB funding statement of strategy
• Spring Budget 2024
• HMRC issues new LTA guidance newsletter
• Taskforce on Social Factors (“TSF”) publishes guide
• DWP responds to consultation on proposed changes to the General Levy
• WPC publishes correspondence with Pensions Minister
• Public service pension increase and revaluation orders published
• Social Security Revaluation of Earnings Factors Order 2024 published

TPR consults on DB funding statement of strategy

On 5 March 2024, TPR published a consultation on the statement of strategy that DB trustees will need to submit as part of planning and managing their scheme’s funding. It forms part of a wider package of changes to DB funding and follows the publication of the revised funding and investment regulations in January.

The first part of the statement will set out the scheme’s funding and investment strategy, with the second part addressing certain “supplementary matters”, including the trustees’ assessment of that strategy, key implementation risks and mitigations, and information relating to investment, funding and covenant.

See our Alert for details.

Spring Budget 2024

The Chancellor, Jeremy Hunt, delivered his Spring Budget on 6 March 2024. Following last year’s announcement of major pensions tax changes, the pensions news this year centred on long-term growth and the further evolution of the Mansion House reforms. Key pensions announcements in the Spring Budget included that:

• in future, DC schemes and the LGPS will be required to disclose their UK investment holdings, although it is not yet clear which DC schemes will be in scope
• as part of the new value for money framework, the FCA and TPR will be given powers to prevent consistently poorly performing schemes from taking on new business from employers
• the Government is working with the ABI to finalise a framework for monitoring progress on the Mansion House “compact”
• the Government “remains committed” to exploring a lifetime provider model for DC schemes in the long-term. Following its 2023 call for evidence, it will “undertake continued analysis and engagement to ensure that this would improve outcomes for pension savers”.

See our Alert for further details.

HMRC issues new LTA guidance newsletter

On 7 March 2024, HMRC issued a new LTA guidance newsletter addressing some frequently asked questions ahead of the abolition of the LTA from 6 April 2024. It covers topics including members with LTA protections, reporting requirements and transitional tax-free amount certificates.

In the newsletter, HMRC confirms some further areas where regulations are expected to address issues in the Finance Act 2024, including in relation to individuals with enhanced protection and the calculation of the commutation limit for a trivial commutation lump sum.

Taskforce on Social Factors (“TSF”) publishes guide

Following its 2023 consultation, the TSF has published its guide on incorporating social factors into trustee investment and stewardship decision-making. Accompanying publications are intended to “provide frameworks of good practice and allow for the assessment of materiality”. These include:

• a “quick start” guide for pension trustees, to support trustees with activities to begin to identify and monitor social risks and opportunities of their scheme’s investments
• case studies on considering social factors
• recommendations to improve the integration of social factors in pension scheme investment.

DWP responds to consultation on proposed changes to the General Levy

In late 2023, the DWP consulted on the following options for mitigating the “ongoing deficit” in General Levy funding:

• continuing with the current levy rates and structure
• retain the current levy structure and increase rates by 6.5% a year
• increase rates by 4% a year plus an additional “premium rate” for small schemes from April 2026.

The DWP’s response was published on 4 March 2024. It has decided to proceed with the second option of retaining the current levy structure and increasing rates by 6.5% per year, “which aligns with the majority of consultation responses received”. Regulations have been made to implement the changes from 1 April 2024.

WPC publishes correspondence with Pensions Minister

The WPC has published a letter from the Pensions Minister, Paul Maynard, dated February 2024. Written in response to queries raised following evidence given by Paul Maynard in the WPC’s inquiry into DB schemes, the letter notes that:

• the DWP plans to engage with key stakeholders in the spring on improving trusteeship, including the barriers to increasing accreditation and how to address them
• the DWP and HMT continue to work closely with TPR to develop a trustee register.

Public service pension increase and revaluation orders published

The Pensions Increase (Review) Order 2024 specifies 6.7% as the amount by which public service pensions will increase from 8 April 2024 (pro-rated for pensions which have been in payment for less than a year). The level of increase is reviewed annually by reference to CPI.

The Public Service Pensions Revaluation Order 2024 sets out the revaluation required by schemes under the Public Service Pensions Act 2013 for the year to 31 March 2024. The Order comes into force on 1 April 2024.

Social Security Revaluation of Earnings Factors Order 2024 published

The Social Security Revaluation of Earnings Factors Order 2024 aims to ensure that earnings factors relating to national insurance contributions for historic tax years, used in the calculation of GMPs, maintain their value in line with the increase in average earnings in England, Scotland and Wales. The Order comes into force on 6 April 2024.