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

• DWP publishes consultation on broadening the investment opportunities of DC schemes
• Bank of England, TPR and the FCA are monitoring progress of LDI funds
• PASA publishes guidance on DC transfers
• FCA launches latest ScamSmart campaign
• FRC announces changes to actuarial standards to make DC pension illustrations more consistent
• ICO blog provides guidance on dealing with subject access requests

DWP publishes consultation on broadening the investment opportunities of DC schemes

On 6 October 2022, the DWP published a consultation on draft regulations and statutory guidance intended to remove performance-based fees from the DC charge cap and implement certain of the changes proposed in its March 2022 consultation. The proposals include:

• amending the default SIP requirements (and main SIP requirements for CDC schemes) to ensure that schemes which provide DC benefits (excluding schemes where the only DC benefits are AVCs) disclose and explain their policies on illiquid investments
• requiring DC and CDC schemes to publicly disclose and explain their default asset class allocation in their annual chair’s statement
• excluding “well-designed” performance-based fees from the charge cap that applies to default arrangements in DC schemes used for automatic enrolment, and
• requiring trustees and managers to have regard to the DWP’s proposed guidance in relation to the asset allocation disclosures, and when determining whether a performance-based fee falls within the new charge cap exemption.

The consultation closes on 10 November 2022 and the draft regulations are currently expected to come into force on 6 April 2023.

See our forthcoming Alert for more details.

Bank of England, TPR and the FCA are monitoring progress of LDI funds

Following the announcement of the Bank of England’s temporary purchases of long-dated gilts to “restore orderly market conditions”, the Bank of England, TPR and the FCA are “closely monitoring the progress of LDI funds”.

On 10 October 2022, the Bank of England announced that it is prepared to increase the maximum size of the remaining daily purchases to “support an orderly exit” from the purchase scheme, which is planned to end on 14 October 2022 (see 7 Days).

PASA publishes guidance on DC transfers

Aiming to improve member experience through “faster and more secure” DC transfers, PASA published new guidance on 10 October 2022. The guidance includes template communications that are intended to improve DC transfer processes, and a recommendation that trustees agree acceptable service levels and timescales with their administrators.

FCA launches latest ScamSmart campaign

On 6 October 2022, the FCA launched its latest ScamSmart campaign, following research suggesting that members may access their pension earlier than planned due to cost of living increases, which, in turn, may make them vulnerable to scams. The campaign seeks to help consumers avoid pension scams by spreading awareness of “misdirection”, such as the offer of a free pension review, as an increasingly common tactic.

FRC announces changes to actuarial standards to make DC pension illustrations more consistent

On 7 October 2022, the FRC announced changes to the Actuarial Standard Technical Memorandum 1 (or AS TM1) intended to make pension illustrations for DC members more consistent and reliable. The changes follow the FRC’s February 2022 consultation (see 7 Days) and aim to standardise assumptions about accumulation rate and the form of annuitisation at retirement. The new standard is intended to be effective for all statutory illustrations issued on or after 1 October 2023.

ICO blog provides guidance on dealing with subject access requests

In a blog published on 26 September 2022, the ICO has set out key advice for organisations dealing with subject access requests. The ICO’s recommendations include using plain English in any responses, being proactive to build trust with the individual making the request, and keeping privacy notices up to date to help individuals to understand how their data is being used.