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 publishes revised covenant guidance
• PDP issues latest progress update report
• Updates on DB scheme funding data
• HMRC publishes latest pension schemes newsletter
• PASA publishes guidance on data scoring
• PLSA publications on net zero and biodiversity

TPR publishes revised covenant guidance

TPR published revised covenant guidance on 4 December 2024, as the “last piece of the jigsaw” to help schemes carry out valuations under the new DB funding regime. It sets out how TPR expects trustees to assess and monitor the employer covenant, covering the various components involved, and includes worked examples on areas that require the “highest level of judgement from trustees”.

See our Alert for further details.

PDP issues latest progress update report

The PDP has published its tenth progress update report covering its work on dashboards over the last six months.

It expects the connection of pension providers and schemes to begin in April 2025, in accordance with the staging timetable set out in DWP guidance. However, the PDP acknowledges that “there remains some uncertainty” about when integrated service providers (“ISPs”) will have completed the connection process. The PDP therefore reassures schemes that the guidance-based approach to connection is “designed to be flexible” so, if their ISP is not able to connect by their “connect by” date in guidance, they do not need to find an alternative route to connection. The PDP will work closely with providers “to reschedule connection slots if this becomes necessary”. All in-scope schemes will need to connect by the statutory deadline of 31 October 2026.

It “remains too early” to confirm when dashboards will become available to the public, but the DWP is expected to provide sufficient notice to allow the industry to prepare.

Updates on DB scheme funding data

On 4 December 2024, the PPF, TPR and the ONS issued a joint statement on DB pension data, to clarify the different approaches to data collection and processing taken by the three organisations and to highlight changes to methodologies used by the PPF and TPR to calculate scheme funding data.

Revised methodology is used by the PPF in the latest edition of its Purple Book, published on 5 December 2024. The book gives a comprehensive picture of the risks faced by PPF-eligible DB pension schemes in the UK, covering the period 1 April 2023 to 31 March 2024. The latest edition found that the net funding position remains strong, with net surplus standing at £219 billion and a funding ratio on a “section 179” funding basis at 123%. When estimated on a full buyout basis, to secure full scheme benefits, the funding ratio was 94%.

HMRC publishes latest pension schemes newsletter

HMRC published Pension Schemes Newsletter 165 on 5 December 2024. It includes an article on the tax treatment of tax-free lump sums paid back into a registered pension scheme, following requests by some members to return payments of a PCLS or UFPLS that they took in light of speculation about the Autumn Budget 2024. HMRC confirms that generally payment of a tax-free lump sum “cannot be undone and the member’s lump sum allowance will not be restored”.

The newsletter also contains guidance on some of the changes made by the recent regulations to address issues in the legislation that abolished the LTA.

PASA publishes guidance on data scoring

On 2 December 2024, PASA published new guidance on data scoring to help trustees test the quality of their scheme’s data. It discusses TPR’s expectations, challenges faced by schemes, key areas to prioritise for data testing, as well as suggested actions for administrators and trustees.

PLSA publications on net zero and biodiversity

On 4 December 2024, the PLSA published the results of a survey on ESG-related issues. Findings include that:

• 65% of schemes have a net zero commitment in place, and among the third that don’t, a further one in five schemes expect to implement one within five years
• 59% cite the lack of high-quality data, and 55% highlight uncertainty around government policy as major barriers
• knowledge of the recommendations published by the Task Force on Nature-related Financial Disclosures is limited, with only 17% of respondents reporting a “strong familiarity” with them (see our publication “ESG beyond climate” for details of the recommendations).

The PLSA has also published a new guide to help enhance trustee understanding of biodiversity and nature-related risks and to help schemes address the challenges posed by these risks.