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 consults on DB funding and investment strategy
- PASA publishes pensions values checklist for dashboards
- Update on implementation of McCloud remedy in the LGPS
- FCA publishes rules and guidance on new consumer duty
- DWP consults on technical amendments to the PPF and Fraud Compensation Fund (“FCF”) Regulations
On 26 July 2022, the DWP published its greatly anticipated consultation and draft regulations to implement new requirements under the PSA21 for DB schemes to have a funding and investment strategy (“F&I Strategy”), and to submit a written statement of that strategy to TPR.
DB schemes will be required to have an F&I Strategy aimed at achieving “low dependency” on their sponsoring employer by the time they are “significantly mature”. The changes aim to result in “better, and clearer, funding standards, but not to move away from the strengths of a flexible scheme specific approach”. The first F&I Strategy must be produced no later than 15 months after the effective date of the first actuarial valuation after the regulations come into force.
TPR’s second consultation on its revised DB funding code of practice, which will set out further detail on the new requirements, will follow once TPR has “taken the opportunity to learn” from this consultation. No date has been specified, but the draft regulations indicate they will come into effect during 2023.
The consultation closes on 17 October 2022. For further details, see our Alert.
On 1 August 2022, PASA published a checklist in relation to calculating value data, designed to support schemes and their administrators in preparing for pensions dashboards. Value data is the term used to describe accrued and projected pension values, including contextual information such as whether the benefits would increase in payment.
The checklist includes examples of steps administrators can take to understand what the value data requirements mean, how to identify and address gaps, and to decide what work can be commenced now pending the final pensions dashboards regulations (see our Alert for details and status of the draft regulations).
On 27 July 2022, the Department for Levelling Up, Housing and Communities gave an update on the next steps to implement the remedy to rectify age discrimination in affected public service pension schemes (see our McCloud case summary). The Government intends to publish a response to its 2020 consultation on proposals to extend the LGPS statutory underpin protection to younger members, alongside an updated version of the draft regulations implementing the McCloud remedy, later this year.
The draft regulations will be subject to a further period of consultation early in 2023, and at that time the Government will also consult on other aspects of the McCloud remedy, such as compensation and rates of interest. The regulations will be made “later in 2023” and are expected to come into force on 1 October 2023. Statutory guidance on the implementation of the remedy will also be issued in 2023, following a period of consultation.
On 27 July 2022, the FCA published final rules and guidance confirming plans to bring in a new duty setting “higher and cleaner” standards of consumer protection for retail customers, requiring firms to consider “the needs, characteristics and objectives of their customers”, including vulnerable customers. The new duty can require firms to consider the “end customers”, whether or not they are direct clients. This includes beneficiaries of trust-based schemes where an FCA-authorised firm is providing services to, or creating products used by, a pension scheme trustee client, and where the firm can determine or materially influence the beneficiaries’ outcomes.
The new rules will be phased in, starting from 31 July 2023 for new and existing products or services, and from 31 July 2024 for products or services which are closed to new business and renewals.
On 27 July 2022, the DWP published a consultation on two technical changes to the PPF and FRC regulations. The changes are designed to:
- enable the PPF to make an interim payment to cover scheme fees and costs while FCF claims are progressed, and
- change PPF provisions regarding child pensions, so that a gap in full-time education of more than one year (such as a “gap year” between school and university) does not result in the loss of PPF compensation.
The consultation closes on 9 September 2022.