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

Consultations published on dashboard design standards and regulatory framework for dashboard services

On 1 December 2022, PDP published a consultation on its draft design standards. The design standards outline how pensions information must be presented to the dashboard user. The aim is to ensure a “consistent user experience” across the various dashboards.

The design standards will be mandatory and will apply to “qualifying pensions dashboard services”, ie commercial dashboard services that have been approved by the FCA. The non-commercial dashboard being developed by MaPS will also be adopting the design standards framework “as far [as] possible”.

The consultation will run alongside the FCA’s consultation on its proposed regulatory framework for the new pensions dashboard service market, which was also published on 1 December. Operating pensions dashboard services will be an FCA-regulated activity and, in developing its proposals, the FCA has tried to strike a balance between protecting consumers and “harnessing the opportunities dashboards create to engage savers with their pensions”.

The two consultations will be mainly of interest to firms that are considering operating a pensions dashboard service. However, they will also be of interest to trustees and other pension providers, to help them understand how the information they send to the dashboard ecosystem will be presented.

The consultations will both run until 16 February 2023.

TPR publishes guidance for DB schemes and advisers on maintaining LDI resilience

On 30 November 2022, TPR published a statement for DB schemes, which aims to achieve and maintain an “appropriate level of resilience” in leveraged LDI funds and improve schemes’ operational governance. This follows statements published by the Central Bank of Ireland and the Commission de Surveillance du Secteur Financier (collectively the “National Competent Authorities” or “NCAs”), setting out expectations that pooled funds maintain a specific level of liquidity buffer, and was “welcomed” by the FCA. Where the statements from the NCAs refer to pooled funds, TPR considers the “same level of resilience” should be maintained for segregated leveraged LDI mandates and single-client funds.

Trustees should test their liquidity buffer by following the steps outlined in TPR’s statement. If trustees depart from the NCAs’ liquidity buffer, they should complete a risk assessment of how they will respond to stressed market events, and prepare a plan for bringing the scheme to higher levels of resilience in the event of market volatility.

TPR recommends trustees confirm authorised signatories are up to date, specify what assets would be sold on collateral/margin calls and the process for doing this, document and regularly review arrangements, and continue to have detailed conversations with LDI managers on liquidity.

A further update is expected in TPR’s Annual Funding Statement in April 2023. TPR may issue further statements and guidance as necessary.

FCA publishes final rules on improving outcomes in non-workplace pensions

On 1 December 2022, the FCA published final rules requiring non-workplace pension providers to take steps aimed at improving consumer outcomes, including offering non-advised consumers a default investment option and issuing warnings about the risk of inflation eroding the value of cash holdings in certain circumstances. Firms affected by the changes will need to comply by 1 December 2023.

HMRC publishes new pension schemes newsletter

HMRC published pension schemes newsletter 145 on 30 November 2022. Amongst other things, HMRC suggests scheme administrators should remind members who have exceeded their annual allowance charge for tax year 2021 to 2022, and who do not have sufficient unused annual allowance to carry forward to cover the excess, to declare this on their Self Assessment tax return, even if the scheme is paying the tax charge.

PPF publishes Purple Book 2022

The PPF published The Purple Book on 1 December 2022. The book gives a comprehensive picture of the risks faced by PPF-eligible DB pension schemes in the UK, covering the period from 1 April 2021 to 31 March 2022. The latest edition found that:

  • for the first time, the majority of schemes provide no form of accrual of benefits, with 51% of schemes closed to new members and new benefit accrual, and
  • on an estimated full buy-out basis, the net funding position of DB schemes improved to a deficit of £438.4bn from a deficit £613.3bn the year before, and the funding ratio improved from 73.7 to 79.2%.