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 publishes independent review of TPR
- Act to extend automatic enrolment (“AE”) receives Royal Assent
- Regulations made to preserve certain pensions EU law
- Modifications to processes for insurers in financial distress
- Brass Trustees Limited v Goldstone and the PPF (High Court) – 31 July 2023
On 19 September 2023, the DWP published the outcome of its review of TPR. The report concludes that TPR is “broadly well-run and well regarded” and has a “strong relationship with the DWP”. Notable successes include the implementation of automatic enrolment. Against this “positive backdrop”, 17 recommendations for improvement are made across risk and growth, compliance and enforcement, and digital transformation and value for money.
It is worth noting that the report was finalised before the Chancellor’s Mansion House speech, where a series of pensions measures were announced which aim to boost saver outcomes and increase investment in productive assets.
On 18 September 2023, the Pensions (Extension of Automatic Enrolment) Act 2023 received Royal Assent. The Act contains regulation-making powers to:
- reduce the lower age limit for AE from 22. The Government has announced it intends to reduce this to age 18, and
- reduce or remove the lower limit of the band of qualifying earnings (currently £6,240 per year) on which minimum contributions are calculated, so that contributions can be calculated on a larger portion of earnings.
The DWP will launch a consultation on regulations to implement these measures. Laura Trott, the Pensions Minister, has previously suggested a consultation could be published in autumn 2023.
The Government has laid regulations before Parliament (available here and here) to preserve the effects of certain cases based on EU law after the relevant provisions of the Retained EU Law (Revocation and Reform) Act 2023 come into force, by restating that:
- members should receive no less than 50% of their accrued pension benefits from the PPF in the event of employer insolvency, and removing the cap on PPF compensation that previously applied to members below their scheme’s normal pension age on the date of their employer’s insolvency (following Hampshire and Hughes)
- members do not need to identify an opposite-sex comparator to show there is discrimination because of GMP legislation (following Allonby), and
- the benefits payable to same-sex surviving spouses and civil partners should be calculated on the same basis as for opposite-sex spouses and civil partners (following Walker v Innospec).
The regulations come into force immediately before the end of 2023.
Regulations have been made to ensure that a “write-down” of annuity contracts, and associated FSCS top-up payments, are not classed as unauthorised payments for tax purposes. This follows changes to the processes for managing insurers in financial distress, including a revised power for Courts to write down (reduce) the value of an insurer’s liabilities.
The High Court has approved a trustee’s decision to issue petitions to wind up the sponsoring employers of its occupational pension scheme, after the sponsor had failed to meet its funding obligations for several years. While the case turned on its facts, it demonstrates the importance of trustees both closely monitoring the employer’s covenant and following proper decision-making processes. See our case summary for details.