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
- High Court decision on failure to obtain a section 37 confirmation
- WPC publishes report on DB schemes with LDI
- DWP issues report on review of the transfer conditions regulations
- PDP publishes new FAQs on the new approach to dashboards connection
- PLSA publishes resource for schemes to support members during the cost of living crisis
On 16 June 2023, in the case Virgin Media v NTL Pension Trustees II Limited (and others), the High Court ruled on the correct interpretation of historic legislation governing the amendment of contracted-out DB schemes.
Relevant for schemes which were contracted-out on a DB basis from 6 April 1997, the court found that section 37 of the PSA93 renders invalid and void any amendment to the scheme’s rules which related to section 9(2B) rights, to the extent that it was introduced without the required written actuarial confirmation. See our Alert for further details.
The WPC published its report on DB schemes with LDI on 23 June 2023, following its recent inquiry. The report acknowledges actions taken by the DWP and TPR in response to the surge in gilt yields in autumn 2022, and sets out areas for further change. Key recommendations include:
- the DWP and TPR should explain how they intend to deliver the Bank of England’s Financial Policy Committee recommendations that TPR should specify minimum levels of resilience for LDI arrangements
- TPR should consider requiring trustees to report regularly on their use of LDI and develop a strategy for engaging more closely with schemes based on the results
- the DWP should publish its consultation on DB consolidation by the end of October 2023 and work with TPR to improve the regulation of trustees and standards of governance, and
- the DWP and TPR should pause the forthcoming new DB funding regime, at least until they have produced a full impact assessment for the proposals, including the impact on open schemes.
The Government’s response is due by 23 August 2023.
On 21 June 2023, the DWP issued a report on its review of the transfer conditions regulations that came into force in November 2021. The review was carried out with the aim of ensuring that the regulations are “working effectively and giving the maximum protection for pension savers”.
The report’s findings include:
- feedback suggests that certain provisions in the regulations, namely the incentives and overseas investments flags (which were the subject of a joint statement from TPR and the DWP in July 2022), are causing delays, and
- to date, TPO has received a relatively small number of complaints about the transfer conditions, mostly concerning transfers blocked due to a red flag.
As feedback the DWP received suggests the incentives and overseas investments flags are causing issues in practice, it is carrying out further work with the pensions industry and TPR “to consider if changes could be implemented to the regulations to improve the pension transfer experience, without undermining the policy intent”.
Following the announcement of the new pensions dashboards connection deadline, the PDP published FAQs on the new approach to connection on 20 June 2023. The FAQs include a comment that the PDP will “engage with industry” on shaping the guidance on when schemes are expected to connect, and the supporting documents for connection.
On 21 June 2023, the PLSA published guidance for schemes that wish to share additional information to support members during the cost of living crisis. The guidance includes a set of Q&As on members’ overall wellbeing and “fiscal health” in retirement, as well as key resources to signpost to members.
The PLSA recommends schemes publish the Q&As online, notify their members of these (or other similar) materials and “actively partner” with employers to help share relevant information with members.