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

• Finance Bill 2023-24 published
• TPR publishes blog on alternative DB funding arrangements
• TPR gives expected timing for new DB funding regime
• FCA sets out rules on Sustainability Disclosure Requirements
• PLSA’s survey on net zero commitments
• PDP provides update on dashboard standards
• Revaluation Order 2023 published

Finance Bill 2023-24 published

On 29 November 2023, the draft Finance Bill 2023-24 was published. The Bill deals with the proposed removal of the LTA from 6 April 2024, including:

• clarifying the tax treatment of pension income, lump sums and lump sum death benefits and the application of protections
• setting out transitional arrangements and reporting requirements.

Important changes have been made to the proposed taxation of pension commencement lump sums since initial draft clauses were published for technical consultation in July 2023 (see our Alert on the autumn statement for more details).

HMRC published a newsletter summarising the proposals on 30 November 2023, and expects to provide further details in a future LTA newsletter.

TPR publishes blog on alternative DB funding arrangements

On 27 November 2023, TPR published a blog on emerging developments in alternative DB funding arrangements, focusing on capital backed journey plans (or capital backed journey arrangements) (“CBJP”), where TPR is seeing “significant activity”. CBJPs generally involve a third party providing additional capital to support a scheme’s investment in higher risk assets with higher expected returns.

Where a scheme’s sponsor is financially distressed, TPR may support CBJPs if they can help members get benefits above PPF levels “on appropriate terms”. In these types of circumstances, elements of TPR’s DB superfund guidance are applicable and TPR expects to assess proposals against the guidance.

The blog sets out actions TPR expects trustees to take if considering a CBJP, including engaging proactively with the employer and TPR, and the PPF if applicable. TPR plans to publish new guidance for DB trustees and employers on alternative arrangements in the new year.

TPR gives expected timing for new DB funding regime

In evidence given to the WPC on 29 November 2023, Louise Davey, the Interim Director of Regulatory Policy, Analysis and Advice at TPR, commented that it is anticipated that the final version of the DB funding and investment regulations will be “introduced in the new year and will be in force by April 2024”, with effect for schemes that have valuations from autumn 2024. TPR’s new DB funding code of practice “will come in on the appropriate timeline to also be in force for those dates”.

FCA sets out rules on Sustainability Disclosure Requirements

The FCA published its final rules and guidance on Sustainability Disclosure Requirements and investment labels on 28 November 2023. The measures being introduced aim to ensure the use of sustainability-related terms in relation to investment products is accurate. They include naming and marketing rules for certain investment products which will apply from 31 July 2024. The rules will not initially apply to pension products, but the FCA will consider extending the regime to include such products in the “medium term”, working with the DWP and TPR.

An “anti-greenwashing” rule will apply to all FCA-authorised firms from 31 May 2024 to “reinforce that sustainability-related claims must be fair, clear and not misleading”. The FCA is consulting until 26 January 2024 on supporting guidance.

PLSA’s survey on net zero commitments

On 29 November 2023, the PLSA published the results of a survey which found that more than two-thirds of pension funds (68%) have a commitment to net zero alignment in place, up from just over half (57%) in May 2022. Nine out of ten funds with a commitment in place are targeting being net zero compliant by 2050. Of the funds that have not made a commitment, 10% planned to do so in the next one to two years, while 20% expected to have one in place in two or more years.

PDP provides update on dashboard standards

On 30 November 2023, the PDP published a blog on recent queries received about pensions dashboards. The blog confirms that the PDP is planning further engagement on refining dashboard standards over winter 2023/24, ahead of final publication and approval by the DWP. The standards outline the mandatory requirements for dashboard providers and pension providers, setting out how operationally, technically and in practice they must meet their legislative duties. The PDP consulted on the standards during 2022 and early 2023.

Data standards are expected to be made available at the same time as the DWP and MaPS connection guidance is published, ahead of other standards.

Revaluation Order 2023 published

The annual Revaluation Order was laid before Parliament on 27 November 2023 and will come into force on 1 January 2024. It sets out the revaluation required in respect of a deferred member’s benefits (in excess of GMP) for deferred members who will reach normal pension age in 2024.