Taking the brakes off pensions in the King’s speech

The King’s Speech, following the general election, revealed that a Pensions Schemes Bill forms part of the new Government’s legislative plans. Background briefing notes on the Bill suggest that Labour is picking up its Tory predecessor’s ‘Mansion House’ reforms, breathing new life into legislation that missed the cut as the curtain rang down on the previous Parliament, and applying a blob of salve to the Pensions Ombudsman’s wounded pride…

Funding Code, reprised & revised

The Pensions Regulator’s Code of Practice on Funding Defined Benefits has been laid before Parliament for approval. It provides important practical detail on how the new funding regime is intended to operate for valuations on and after 22 September 2024. The Regulator has also published its response to the consultation on its regulatory approach, which includes the finalised ‘Fast Track’ parameterisation.

Early news on promised review

On 22 July, the new, Labour Government announced a review to ‘boost investment, increase pension pots and tackle waste in the pensions system’. The review was one of Labour’s general election manifesto commitments.¹

Supercharging superfunds

The Pensions Regulator has updated its DB superfunds guidance. As expected, it allows for surplus capital extraction from ongoing schemes—subject to safeguards.

Member ‘interests’ embrace future accrual & salary link

The Court of Appeal has ruled on the breadth of members’ ‘interests’ that are protected by a restriction contained in a defined benefit scheme’s amendment power.¹ The Court decided that those interests include the continued (though qualified) linkage of past-service rights to final salary, and the ability to continue to accrue benefits on the same terms.

Regulator’s fine unreasonable & disproportionate

The First-Tier Tribunal has found that it was ‘not reasonable or proportionate’ for the Regulator to impose an escalating penalty notice without allowing sufficient time for an employer’s proposal to rectify a contribution shortfall.¹ This case continues the trend of judgments critical of the way the Regulator’s compliance and enforcement practices are being used in relation to automatic enrolment.²

DC scheme returns

The Pensions Regulator will issue scheme-return notices to defined contribution (DC) schemes between August and December 2024. There will be new questions about scheme leavers, primary dashboards contacts, review of objectives for investment consultancy providers, and benefit payments. Trustees and scheme managers must complete and submit their scheme return on Exchange, the Regulator’s online reporting system, by the due date specified in the notice, or risk being fined.

If you’d like to discuss anything we’ve covered, or have any questions, please get in touch.

¹ BBC v BBC Pension Trust Ltd & Anor [2024] EWCA Civ 767.

² [2023] EWHC 1965 (Ch).

This communication has been compiled by Hymans Robertson LLP® (HR) as a general information summary and is based on its understanding of events as at the date of publication, which may be subject to change. It is not to be relied upon for investment or financial decisions and is not a substitute for professional advice (including for legal, investment or tax advice) on specific circumstances. HR accepts no liability for errors or omissions or reliance on any statement or opinion. Where we have relied upon data provided by third parties, reasonable care has been taken to assess its accuracy however we provide no guarantee and accept no liability in respect of any errors made by any third party.