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 blog on getting data “dashboards-ready”
- TPR to publish guidance on alternatives to buy-out
- Government confirms tax treatment of stand-alone lump sums following Spring Budget
- Bank of England raises concerns about funded reinsurance
On 14 June 2023, TPR published a blog on preparing for dashboards, following the recent announcement confirming a new connection deadline of 31 October 2026, with a staging timeline set out in guidance. Despite the delay, the DWP and TPR expect all trustees to be getting to grips with their data now to avoid competing demands on capacity.
Trustees must understand what data will be needed for dashboards and then audit whether the data is in a dashboards-ready format – ie accessible, accurate and available digitally. According to TPR, the biggest issue with data accuracy is with deferred members, including historical data gaps, members not updating details and problems with data quality from employers.
TPR cautions that trustees shouldn’t underestimate the time that this will take and “now is the time for action”. TPR’s guidance is a useful starting point for improving scheme data.
The WPC published TPR’s written evidence to its DB inquiry on 8 June 2023. TPR’s evidence covers a wide range of topics, including DB funding, consolidation and the quality of trustee boards. In particular, TPR confirms:
- it will publish guidance for trustees, setting out the issues they should bear in mind when considering alternative models to buy-out, such as DB superfunds
- it is reviewing the Trustee Toolkit, a free online training programme for trustees, to make it “more accessible” and to align it more with TPR’s codes and guidance so it acts as a “gateway” to TPR’s wider expectations.
No timings have been given in relation to the above.
On 13 June 2023, the Government proposed changes to the Finance (No. 2) Bill 2023, which will implement various aspects of the Spring Budget. The changes are intended to clarify that no income tax liability arises on a stand-alone lump sum that does not exceed the 5 April 2023 maximum and that a marginal rate income tax charge arises on any stand-alone lump sum above the 5 April 2023 maximum.
The Bank of England has published a letter dated 15 June 2023 to PRA-regulated life insurance firms giving feedback on its preliminary thematic review work on funded reinsurance arrangements in the bulk purchase annuity market. Funded reinsurance is, broadly speaking, the transfer of assets as well as investment and longevity risk to a reinsurer. Following the review, the PRA is “mindful” of the potential risk of UK life insurers underestimating the counterparty risk in these transactions and sets out several particular areas of potential risk.
The PRA expects insurers to consider its findings and to “take the appropriate remedial action”. The PRA intends to plan further supervisory work in this area and is also considering whether there is a need to develop further “specific policy”, beyond existing expectations.