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
- Finance (No.2) Bill 2023 published
- PSIG publishes interim guidance on pension transfers
- TPR publishes review of climate reports
- TPR publishes blog on the proposed value for money framework
- TPR publishes blog on the importance of data
- TPR announces new value for members initiative
- Pension increase rate for public service pensions published
The Bill will make changes to the pensions tax system so as to:
- increase the standard, money purchase and tapered AAs with effect from 6 April 2023
- remove the LTA charge with effect from 6 April 2023
- generally freeze the maximum PCLS at £268,275 (being 25% of the current LTA)
- grandfather existing rights to higher PCLSs for those with certain tax protections.
The abolition of the LTA will be dealt with by a separate Finance Bill. See our Alert for further details. The Bill will now make its way through the Parliamentary process and is expected to receive Royal Assent before the summer recess.
On 27 March 2023, HMRC published a newsletter containing further guidance on the changes to the LTA. It includes information about PCLSs and LTA protections, with examples of how to calculate the PCLS, as well as information about operating LTA checks and issuing benefit crystallisation event statements after 6 April 2023. HMRC will provide further updates on the LTA changes through future newsletters, and guidance for members is expected to be published on 6 April 2023. Our Alert will be updated shortly with information about the newsletter.
PSIG published an Interim Practitioner Guide along with a short summary of the guide on 20 March 2023. The guide aims to help trustees and administrators follow the conditions on transfers that came into force in November 2021. It contains useful guidance on the use of discretionary transfers, and explores the issues in relation to incentives and overseas investments which were the subject of a joint statement from TPR and the DWP in July 2022.
PSIG decided not to update the PSIG Code, as there are elements in the regulations that “need to be clarified or amended”. When those issues have been resolved, PSIG intends to update both this guide and the full PSIG Code. The DWP is due to revisit the regulations by May 2023 as part of a scheduled review.
TPR published the results of its review of a selection of schemes’ annual climate reports on 23 March 2023, highlighting areas of improvements and emerging good practice. TPR found that almost all reports were published on time, and the reports showed an “encouraging level of trustee engagement” with the requirements. Some reports included helpful non-technical summaries for savers. Data quality and coverage “remain a challenge”, but TPR thinks this is likely to improve over time.
TPR asks trustees to consider some areas for improvement when preparing their next report, including providing sufficient background information on the scheme, and ensuring reports are fully accessible to savers with different needs (for example being compatible with accessibility software and capable of being printed).
On 20 March 2023, TPR published a blog by Sarah Smart, TPR’s Chair, to clarify its approach and the aims of the value for money framework proposed in a joint consultation published in January (see our Alert for details). The framework will apply to default funds initially, before potentially expanding, because of the importance of savers receiving value for money “by default” where they have not made an active choice. The overall goals of the framework include driving improvements across the whole market, with poorly performing schemes “either improving or getting out of the market”. The consultation closed today, 27 March 2023.
On 21 March 2023, TPR published a blog by Charles Counsell, TPR’s Chief Executive, discussing the importance of data to “drive the improvements needed to protect savers”. TPR’s new Digital, Data and Technology directorate aims to help TPR deliver better services, regulate more effectively and meet future challenges.
The blog confirms that TPR expects to publish the single code (referred to as the new General Code of Practice) “later this spring”.
TPR announced on 27 March 2023 that it is working on an initiative to check compliance with the value for members requirements which apply to DC schemes with assets of less than £100m, after finding in 2022 that only 17% of schemes required to complete the assessment had done so. Communications to trustees will begin “later this year”. This initiative is separate from the joint consultation on a new value for money framework.
The Pensions Increase (Review) Order 2023 was laid before Parliament on 20 March 2023 and specifies 10.1% as the amount by which public service pensions will increase from 10 April 2023 (pro-rated for pensions which have been in payment for less than a year). The level of increase is reviewed annually by reference to CPI.