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

• FCA proposes rules for pension providers on pensions dashboards
• Automatic enrolment earnings trigger and qualifying earnings bands to remain unchanged for 2022/23
• Paper explaining how climate change can be reflected in employer covenant assessments is published
• FRC consults on proposed changes to AS TM1 to reflect pensions dashboards requirements
• SPA review – call for evidence issued
• Sackers’ survey shows industry is split on new transfer regulations

FCA proposes rules for pension providers on pensions dashboards

The FCA has published a consultation on draft rules requiring FCA regulated pension providers to connect and supply information about personal and stakeholder pensions to pensions dashboards.  The consultation closes on 8 April 2022 and the FCA has said that any feedback will inform its ongoing work to support pensions dashboards, as well as the final rules it intends to publish in the autumn.

The FCA has confirmed it will consult on the regulatory framework for the operators of qualifying pensions dashboard services (“QPDS”) “later this year”. This follows the DWP’s current consultation on requirements to be met for a pensions dashboards service to be a QPDS, and the requirements to be met by the trustees or managers of relevant occupational pension schemes (see our Alert).

Automatic enrolment earnings trigger and qualifying earnings bands to remain unchanged for 2022/23

On 8 February 2022, the DWP published its annual review of the AE earnings trigger and qualifying earnings band for 2022/23. The Secretary of State has concluded that the existing earnings trigger threshold of £10,000 remains the correct level and will not change for 2022/23. This represents a decrease in real terms in the value of the trigger.  As earnings continue to grow, the DWP estimates that freezing the earnings trigger will bring in an additional 17,000 savers into pension savings when compared to increasing the trigger in line with average wage growth.

The Secretary of State also decided to freeze both the lower and upper earnings bands at the 2021/22 level for 2022/23, ie at £6,240 and £50,270 respectively.

Paper explaining how climate change can be reflected in employer covenant assessments is published

A paper by the Employer Covenant Practitioners Association, published on 8 February 2022, explains how climate change is impacting the covenants of a range of employers sponsoring DB pension schemes. It also sets out suggested approaches to addressing the impact of climate change in employer covenant assessments and IRM plans.

FRC consults on proposed changes to AS TM1 to reflect pensions dashboards requirements

On 14 February 2022, FRC published a consultation paper on proposed changes to the Actuarial Standard Technical Memorandum 1 (AS TM1) to reflect the new environment that will exist once pensions dashboards are required to display Estimated Retirement Income illustrations.

AS TM1 will continue to apply to the SMPI statements that individuals receive each year, and the DWP has proposed in its consultation on pensions dashboards that AS TM1 will also determine the illustrations of defined contribution pensions shown on pensions dashboards, from October 2023.

The consultation closes on 6 May 2022.

SPA review – call for evidence issued

A call for evidence was published on 9 February 2022, which will gather information to inform an independent report on SPA.  The independent report is part of the DWP’s latest review of SPA and will make recommendations to the government on what metrics should be taken into account when setting SPA in future.  The closing date for submissions is 25 April 2022.

Sackers’ survey shows industry is split on new transfer regulations

On 7 February 2022, Sackers announced the results of a recent webinar survey showing the industry is still very much split when it comes to new transfer regulations (see our Alert), with half of respondents in our survey (49%) believing they will help reduce the risk of pension scams and 47% still waiting to see what the reality holds for them and their members.

James Bingham, partner at Sackers, commented: “These results aren’t entirely surprising. As is often the case with new regulations that are rushed in, as these were, there are grey areas that are likely to give rise to increased confusion, conflict, and claims”.