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 proposes keeping levy at £100m
• TPR expanding engagement with administrators
• TPR publishes speech on transparency in investment performance
• FCA encourages firms to explore new approaches to pensions engagement
• PPI publishes report on pension scheme assets and how they are invested
• In Sackers news

PPF proposes keeping levy at £100m

On 12 September 2024, the PPF published its consultation on the 2025/26 levy rules. The PPF’s proposed levy estimate is £100m, the same as 2024/25. The PPF will continue to engage with the Government on legislative changes which would enable the levy to be reduced further, including to zero, given the PPF’s strong financial position.

Minor changes proposed to the levy methodology are intended to ensure that the risk-based levy continues to be paid by a broad range of levy payers, and that it continues to be distributed in a way that reflects risk, as far as possible.

The consultation closes on 23 October 2024, with the final rules expected in December.

TPR expanding engagement with administrators

In a blog published on 12 September 2024, TPR set out how expanding its engagement with administrators could “boost member outcomes”. It notes the current challenges faced by administrators, including a surge in demand for pensions administration services and issues such as GMP equalisation.

Through a pilot programme last year, TPR has developed “actionable recommendations” for administrators to protect against the risk of poor administration. These include enhanced internal checking processes and developing better communications to simplify complex pension terms. TPR plans to expand its engagement with the market, including working with schemes of all types and sizes, with the aim of “protecting savers and enhancing trust” in the pension system.

TPR publishes speech on transparency in investment performance

On 11 September 2024, TPR published a speech on investment performance disclosure and improving outcomes for members. TPR is increasing its focus on investments, including through using greater numbers of investment consultants and changing its structure to be more market-facing and outcome-focused.

TPR believes that “sound investment in diverse assets can not only improve outcomes for savers but could also generate growth for the UK economy”. However, for there to be “meaningful changes” in investment strategies, there needs to be greater transparency in the industry around performance and costs. The “first step” is to bring greater transparency on value through the forthcoming value for money framework which will require schemes to publish consistent, comparable metrics.

FCA encourages firms to explore new approaches to pensions engagement

On 11 September 2024, the FCA published new research on member engagement with emails. It tested how different subject lines and email messages could influence people’s engagement and understanding of emails about their pensions. Overall, the FCA found that engagement with emails was low, with only 1% to 7% of customers clicking through to receive free financial guidance that was offered.

As a result of the research, the FCA considers it is difficult to get people to engage with their pensions through email alone. Firms are encouraged to explore “innovative approaches” in talking to customers about their pensions.

PPI publishes report on pension scheme assets and how they are invested

On 9 September 2024, the PPI published a report “Pension scheme assets – how they are invested and how and why do they change over time”. The report includes details of the challenges of defining asset classes, and information about how and where UK pension scheme assets were invested in 2023. It aims to clarify the topic and support discussions with the Government “about how assets can be defined and reported on in the future”.

In Sackers news

Our recent webinar “How to solve the problem of overpayments” gives practical tips and solutions to the difficulties and pitfalls that can arise, drawing on our litigation team’s wealth of experience in this area. You can watch it here.

Our next webinar “The new DB funding regime – evolution not revolution” will be held on 8 October 2024. It will look at the key practical implications of the new DB funding requirements for trustees, employers and their advisers. Click here for more details and to register.