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

• Pension Schemes Bill announced in the King’s Speech
• Government launches pensions review
• Deadline approaching to apply to defer dashboards connection
• FRC announces update to the Stewardship Code

Pension Schemes Bill announced in the King’s Speech

The King’s Speech on 17 July 2024 set out the new Government’s legislative agenda for the current Parliamentary session. This includes a new Pension Schemes Bill intended to encourage consolidation and focus on value and outcomes for members, to “enable security in retirement, but also enable pension schemes to invest in a wider range of assets, driving growth”.

Continuing some of the “Mansion House” policy proposals of the previous Government, the Pension Schemes Bill is expected to include measures to introduce:

• automatic consolidation of deferred small DC pension pots
• a new VFM framework for trust-based DC schemes to demonstrate they deliver value. This is expected to apply consistently across the whole pensions market, with the FCA introducing rules for contract-based schemes
• new duties for trustees to offer a retirement income solution or range of solutions, including default investment options, and
• a framework for commercial DB superfunds.

It will also reaffirm TPO as a competent court. In the meantime, TPO asks trustees to continue to follow its guidance on the process to follow to enforce TPO determinations on the recoupment of disputed overpayments.

No timing is given for the measures to come into force.

Government launches pensions review

Following its election manifesto commitment to review the pensions landscape, the Government has announced the launch of a review to “boost investment, increase pension pots and tackle waste in the pensions system”.

The first phase, led by the Pensions Minister, Emma Reynolds, will focus on actions to support greater productive investment and better retirement outcomes, including through consolidation and “encouraging at-scale schemes to increase returns through broader investment strategies”. This phase is expected to be reported on “in the next few months” and will consider further measures to support the new Pension Schemes Bill.

The next phase, expected later this year, will look at “further steps to improve pension outcomes and increase investment in UK markets, including assessing retirement adequacy”. The review will also consider “how to unlock the investment potential” of the LGPS.

Deadline approaching to apply to defer dashboards connection

Trustees of in-scope schemes must connect to the dashboards ecosystem by a statutory deadline of 31 October 2026, but having regard to a phased connection timetable set out in DWP’s connection guidance (“the Guidance”) (see our Alert).

Provided certain stringent conditions are met, trustees can apply to defer the statutory deadline when changing administrator. An application for deferral must be made no later than 8 August 2024.

If trustees do not believe it is possible to connect by their scheme’s staging date in the Guidance but they will still meet the statutory deadline, they do not have to make a formal application to defer, but should:

• review the DWP’s deferred connection guidance, which sets out information that they may wish to consider, and
• communicate their plans with the PDP and TPR “at the earliest opportunity”.

FRC announces update to the Stewardship Code

On 22 July 2024, the FRC announced “significant revisions” to the UK Stewardship Code (“the Code”) application process, and gave an update on its ongoing review of the Code.

Some “immediate changes” are intended to reduce the burden on signatories, for example by enabling cross-references to previous reports to reduce the volume of reporting. These changes to the Code will apply for the next application window (31 October 2024) and the FRC intends to write to signatories individually to inform them of how the changes impact them.

The FRC expects to launch a public consultation on the revised Code later this year.