| PARLIAMENT | Effective Date | Effect |
| Bills (and Acts not yet in force) | ||
| GMP Conversion – Conversion of GMPs Act (Royal Assent 28/4/2022) | Not yet in force | Will facilitate converting GMPs once relevant Regulations made. Still awaiting DWP’s consultation on the Regulations. Click here for article in June 2022 Pensions Compass. |
| Data Protection and Digital Information (No. 2) Bill | Bill introduced on 8 March 2023 in House of Commons, replacing the original Bill. To be enacted Q1 2024? | Updating the UK’s data protection laws, to reduce burden whilst ensuring standards. The No. 2 Bill provides a new version of the GDPR replacing the EU’s data protection laws. Numerous sets of regulations are likely to be needed before the Bill once enacted can come fully into effect. The Bill is in the House of Commons and has yet to go to the House of Lords. |
| Economic Activity of Public Bodies (Overseas Matters) Bill | Introduced June 2023. To be enacted Q1 2024? | Obliges public bodies including, it seems, the Local Government Pension Scheme to conduct procurement and investment activity in ways not contrary to Government policy. The Bill (previously named the Boycotts, Disinvestment and Sanctions Bill) is in the House of Commons at present and has yet to go to the House of Lords. |
| Pensions Dashboards (Prohibition of Indemnification) Act | Royal Assent 2 April 2023. Not yet in force, may be during 2024. | Trustees reimbursing themselves out of scheme assets for TPR fines under Dashboard Regulations to constitute criminal offence. |
| Finance Bill 2023-24 | Bill introduced in Parliament on 29 November 2023, expected to take effect from 6 April 2024 as per the Chancellor’s Autumn Statement. | The Consultation on the draft Finance Bill clauses closed on 12 September 2023. In his Autumn Statement on 22 November 2023 the Chancellor confirmed the lifetime allowance regime will be replaced by a new “allowances” regime from 6 April 2024 and this is reflected in Finance Bill 2023 – 2024. Click here for the article in Part 3 of this Pensions Compass. |
| Recent Acts in force | ||
| Economic Crime and Corporate Transparency Act 2023 | Royal Assent 26 October 2023 | Tightens operation of Companies House and company structures e.g. in relation to corporate directors. Majority of provisions will come into effect when Regulations made. |
| Online Safety Act 2023 | 26 October 2023 | Hopefully will assist in combating fraud including pension fraud. |
| Pensions (Extension of Automatic Enrolment) (No. 2) Act 2023 | Royal Assent 18 September 2023 | The Act empowers the Secretary of State to make Regulations extending (1) auto-enrolment to all jobholders aged at least 18 in place of the current minimum age of 22 years, and (2) removing the lower qualifying earnings threshold. The Act requires the Secretary of State to consult on the Regulations. WB comment: implementation remains uncertain as the Consultation has yet to be issued. |
| Retained EU Law (Revocation and Reform) Act 2023 | Royal Assent 29 June 2023 | List of Retained EU law to be revoked by 31 December 2023. For Regulations restating certain parts of EU Retained Law otherwise revoked by 31 December 2023, see below under Recent Regulations. |
| Financial Services and Markets Act 2023 | Royal Assent 29 June 2023 | Updates the UK’s framework for financial services. |
| Finance (No.2) Act 2023 | 6 April 2023 | Click here for article in July 2023 Pensions Compass on: • abolition of lifetime allowance charges • increase to annual allowance • increase in money purchase allowance • freezing of limit on tax free lump sums • permitting new pension accrual for members with ‘protection’. • marginal rate income tax on certain lump sums in excess of the lifetime allowance Other changes include: • provision for HMRC to pay top-ups directly to low earning members using net pay arrangements, equating them to members receiving tax relief at source • tax changes to support the Dormant Assets Scheme. |
| Forthcoming Regulations (including expected Regulations) | ||
| DB schemes – Funding and Investment Strategy Amendment Regulations | Timing uncertain – may be Q1 2024 with effect from April or October 2024 | DWP Consultation on draft Regulations closed October 2022 and DWP response awaited. The (draft) Regulations reflect significant amendments to the Pensions Act 2004 scheme specific funding regime by Pension Schemes Act 2021. Click here for the article in February 2023 Pensions Compass. The House of Commons Work and Pensions Committee urged a more relaxed approach for “open” DB schemes (19 July 2023 letter to DWP). DWP has taken on board facilitating productive investment in line with the Government’s “Mansion House” proposals. See also below under Other Developments re TPR’s proposed revised DB Funding and Investment Code of Practice. |
| GMP Conversion Regulations | Timing uncertain, Consultation on draft Regulations awaited | See above under Conversion of GMPs Act |
| Notifiable Events Amendment Regulations | Timing uncertain – may be late 2024 | Additional Events to be notified to TPR and to scheme trustees (change in control of an employer, sale of material proportion of business or assets and/or granting of certain security rights). DWP’s Consultation on these proposed controversial Regulations closed on 27 October 2021 and DWP’s Response is awaited. Click here to listen to our December 2021 Podcast. |
| Extension of Automatic Enrolment Regulations | Timing uncertain | See above under Pensions (Extension of Automatic Enrolment) (No. 2) Act 2023 |
| Recent Regulations | ||
| Regulations restating Retained EU Law otherwise lost by 31 December 2023 | 18 September 2023 Regulations to come into force by 31 December 2023 | Various sets of Regulations retaining in UK law certain effects of EU law including the upshot of the ‘Hampshire’ case regarding calculating PPF compensation. |
| Pensions Dashboards Amendment Regulations | 9 August 2023 | Click here for the article in December 2022 Pensions Compass and here for the article in March 2022 Pensions Compass. The December 2022 Regulations specified statutory connection deadlines. However, in March 2023 the Government announced there were IT connection problems. The August 2023 Pensions Dashboards Amendment Regulations amend the December 2022 Regulations and specify a single statutory connection deadline of October 2026 with staging to be included in Guidance (still awaited). Click here for the article in Part 4 of July 2023 Pensions Compass. |
| DC schemes – Default funds illiquid assets: Administration, Investment, Charges and Governance Amendment Regulations | Regulations came into force on 6 April 2023 | DWP Consultation closed 10 November 2022. Encouraging scheme trustees to invest part of auto – enrolment Default funds in illiquid assets, such as infrastructure funds and requiring relevant DC Schemes to disclose and explain their policy regarding illiquid investments. Click here for article in December 2022 Pensions Compass. Statutory Guidance has also been published. |
| Climate Change – Governance and Reporting Amendment Regulations | 1 October 2022 | In scope schemes to measure their alignment with Paris Agreement climate goal “so far as they are able to”. Click here for the article in July 2023 Pensions Compass, here for the article in May 2023 Pensions Compass and here for the September 2022 Pensions Compass article. |
| RECENT COURT DECISIONS | |
| FROM THE COURTS | RECENT DECISIONS |
| Recouping overpayments Pensions Ombudsman v CMG 1 November 2023 | Court of Appeal unanimously decided the Pensions Ombudsman was not a “competent court” and so scheme trustees need to obtain a county court order to recoup overpaid pension from future pension payments. Click here for the article in Part 4 of this Pensions Compass and here for the article on Surplus in this Pensions Compass. |
| Surplus on winding up Standard Life Trustee 1 August 2023 | Decision of Inner House of Court of Session of Scotland in the context of the scheme rules which were silent on the point, the Court decided the surplus should be held on resulting trust for the current employers. Click here for the article in Part 2 of October 2023 Pensions Compass. |
| Trustee’s petition to wind up scheme’s sponsoring employers Brass Trustees v Goldstone and PPF 31 July 2023 | High Court approval given to scheme trustee to issue petition to wind up the scheme’s sponsoring employers. |
| Trustee asks Court about alteration powers BBC v BBC Pension Trust & Another 28 July 2023 | The High Court decided that, based on the scheme rules, members’ “interests” extend to future benefits as well as past. It is reported that on 15 September 2023 the BBC were given permission to appeal to the Court of Appeal. It seems that the appeal will be heard on 25 June 2024. Click here for the article in Part 2 of October 2023 Pensions Compass. |
| TPR’s anti-avoidance powers: Contribution Notices Shah v TPR 28 July 2023 | On 28 July 2023 the Upper Tribunal upheld Contribution Notices issued in 2020 and dismissed Mr Shah’s appeal. Click here for the article in Part 2 of July 2023 Pensions Compass – Pension cases in the pipeline. |
| Tax relief denied on in specie member contributions Killick & Co LLP v HMRC First Tier Tribunal (“FTT”) 28 July 2023 | The FTT upheld HMRC’s withdrawal of tax relief for in specie member contributions under the Killick & Co SIPP, following the Upper Tax Tribunal’s decision in Sippchoice on 12 May 2020. |
| Climate Change – Trustee Directors’ duties McGaughey v USS Court of Appeal, 21 July 2023 | The Court of Appeal dismissal appeals: the two pension scheme members could not bring a derivative action obliging the corporate trustee to pursue an action against its directors for various alleged failures to move the pension scheme away from investing in fossil fuels. Click here for the article in Part 1 of October 2023 Pensions Compass. |
| Validity of amendments in absence of section 37 actuarial written confirmation Virgin Media v NTL Pensions 16 June 2023 | Virgin asked the High Court to decide whether certain scheme amendments relating to revaluation were valid. Being contracted-out, it was argued the scheme amendments affecting contracted -out benefits should have been accompanied by written actuarial confirmation under section 37 Pension Schemes Act 1993. For the purposes of the case the Court was asked to assume there was no actuarial confirmation. The case was heard on 2 May 2023 and judgment given on 16 June 2023. The High Court decided that, in the (assumed) absence of written actuarial confirmation, the amendments in question were void. Permission to appeal to the Court of Appeal has been granted and the case is due to be heard on 24 or 25 June 2024. Click here for the article in Part 2 of October 2023 Pensions Compass. |
| Climate Change – Employers’ duties 12 May and 24 July 2023 ClientEarth v Shell PLC | The environmental charity, ClientEarth, sought Court permission to bring a claim against the board of Directors of Shell PLC, alleging the board had failed to implement an energy transition plan aligning with targets in the Paris Agreement. On 12 May 2023 on the papers, the Court refused permission saying that the evidence “falls some way short of establishing a prima facie case that the way in which Shell’s business is being managed by the directors could not properly be regarded by them as in the best interests of Shell’s members as a whole”. After a subsequent oral hearing, the High Court on 24 July 2023 confirmed its original decision. Click here for the article in Part 1 of October 2023 Pensions Compass; click here for the article in July 2023 Pensions Compass; and here for the article in May 2023 Pensions Compass. ClientEarth has announced it will seek permission to appeal the High Court’s latest decision. |
| Tax – Employer/Trustee Transactions Morgan Lloyd v Trustees HMRC First Tier Tribunal 31 March 2023 | The FTT upheld the tax charges on the transactions involving sale of Intellectual Property to the pension scheme and certain loans. |
| Creditor’s right to force draw down pension Manolete Partners PLC v White High Court 16 March 2023 | Whether the Court should direct a member, a former director of a company, to draw his pension to satisfy the creditor’s claim for breach of director’s duties. The Court so ordered saying that section 91(2) Pensions Act 1995 was no bar as the member was to be paid his pension, albeit it would then be used by his creditor. |
| Bankruptcy Wilson v McNamara and Others Court of Appeal 16 January 2023 | The trustees in bankruptcy appealed the High Court’s decision on 15 February 2022, arguing there is justification for not shielding the Irish pension scheme from the English bankruptcy (the High Court had decided the Irish pension scheme rights were beyond the English trustees in bankruptcy’s reach, click here for the article in the 2022 Pensions Compass). The Court of Appeal unanimously upheld the High Court’s decision: the justification arguments had been raised far too late and could not now be heard (Wedlake Bell acts for the pension scheme trustees). |
| Corrections Viavi Solutions UK High Court 22 September 2022 | Good explanation of the circumstances in which the Court will order Rectification (correction) of scheme rules. Click here for the article in February 2023 Pensions Compass. |
| Forfeiting arrears due to members more than 6 years ago, and trustees’ recouping overpayments CMG Trustee v CGI Limited High Court, 11 August 2022 | Members had been paid extra pension benefits in the past following the scheme’s sex equalisation process and corrective scheme amendments. The employer argued that the arrears paid were too great and should in accordance with its reading of the scheme’s rule be limited to amounts due not more than 6 years previously and even though the members concerned were unaware of their claims. The High Court upheld the employer’s view and also explained how the legislation relating to trustees recouping overpayments from future pension works. See above for the Court of Appeal’s decision on recoupment on 1 November 2023 on an appeal by the Pensions Ombudsman. NB forfeiture and recoupment are complex legal areas on which legal advice is essential. Click here for the article in Part 4 of this Pensions Compass. |
| Tax treatment of facilitation payments E.ON UK v HMRC Court of Appeal 7 November 2023 | Whether employer payments to employees regarding adverse pension scheme changes are taxable. The First-Tier Tribunal ruled, yes. The Upper Tribunal ruled, no, on the basis that the payments were not “from” the employment. The Court of Appeal reversed the Upper Tribunal decision and agreed with the First – Tier Tribunal that the payments to employees were subject to income tax and NICs. |
| FROM THE COURTS | FUTURE CASES |
| Age Discrimination Fire Brigades etc v HM Treasury | On 10 March 2023 the Court ruled that the Government’s cost control method was correct. The Unions appeal is due to be heard by the Court of Appeal on 20 February 2024. |
| Scheme alterations BBC v BBC Pension Trust | As mentioned above under “Recent Decisions”, the BBC has been given permission to appeal to the Court of Appeal against the High Court’s decision on 28 July 2023. The Appeal Court hearing is due on 25 June 2024.. |
| Scheme alterations Virgin Media | As mentioned under “Recent Decisions”, the Appeal Court hearing against the High Court’s judgment is due on 24 or 25 June 2024. |
| PPF | |
| PPF Levy for 2024/2025 | The PPF published its Consultation on the (draft) Levy Rules for PPF Levy Year 2024/2025 on 11 September 2023. The Consultation closed on 30 October 2023. The PPF expect levy to reduce by half compared to the 2023/2024 estimate. |
| DWP | |
| General Levy review | DWP’s Consultation on the General Levy opened on 2 October 2023 and closed on 13 November 2023. Three different options are put forward for Levy Years 2024/25, 2025/26 and 2026/27. Government’s decision is awaited. |
| TPR | |
| TPR blogs on Climate Change | TPR’s blogs: 29 August 2023 “How trustees can help make climate scenario analysis decision – useful”. TPR urges trustees to improve their climate reporting – click here for the article in this Pensions Compass. Click here for our article in July 2023 Pensions Compass on TPR’s blog on 17 May 2023 “ESG elephant is now in the room”. |
| TPR revised Code of Practice for DC schemes | On 25 August 2023, TPR published the revised Code of Practice No. 13 re schemes providing money purchase benefits plus ancillary detailed Guidance relating to Communications and Reporting, and DC Investment Guidance. The updated Code and Guidance reflect the impact of legislative changes in recent years. |
| TPR and DWP – Memorandum of Understanding re prosecution of new criminal offences | On 7 February 2023 TPR and DWP entered into a Memorandum of Understanding with DWP as to which body would prosecute criminal offences under Pension Schemes Act 2021. In general, the prosecutor will be TPR. |
| TPR further Guidance | On 12th January 2023 TPR updated its November 2022 Guidance on dealing with Transfer requests.On 28 March 2023 TPR published Guidance for employers and trustees in relation to Equality, Diversity and Inclusion. On 10 August 2023 TPR issued updated Guidance on Superfunds, recognising that the Government’s intention to legislate for Superfunds and its Call for Evidence regarding other consolidation options will take time. Click here for the Mansion House Reforms article in Part 4 of October 2023 Pensions Compass and here for an update in Part 2 of this Pensions Compass. On 6 November 2023 it was announced TPR had cleared the first superfund transaction with Clara Pensions relating to the Sears Retail Pension Scheme. |
| TPR’s Consultation on its proposed new DB Funding Code of Practice | On 16 December 2022, TPR published its Consultation on its proposed DB Funding Code of Practice, which closed on 24 March 2023. Click here for the article in February 2023 Pensions Compass. The new Code of Practice is not expected to come into force until April or October 2024. The new Code is ancillary to the proposed Regulations amending the Pensions Act 2004 scheme specific funding regime – see under Parliament in this Ready Reckoner. On 29 November 2023 TPR confirmed to the House of Commons Work and Pensions Committee that it had taken on board criticism of its draft Code and will emphasise the importance of considering investing in growth assets in line with the “Mansion House” proposals. |
| TPR’s Annual Funding Statement 2023 | This Annual Statement provides an update on TPR’s thinking on scheme Valuations, especially Valuations in the year from 22 September 2022. |
| TPR’s Single Code of Practice, now to be called the General Code of Practice | On 17 March 2021, TPR consulted on amalgamating 15 individual Codes into a Single New Code. The Consultation closed on 26 May 2021. On 24 August 2021 TPR published its interim response. On 9 March 2023 it was reported that the Single Code is likely to be laid in Parliament in Spring 2023 and would be called the “General Code”. TPR’s Corporate Plan published on 21 April 2023 now states the General Code will be launched during the year – we understand this may be in Q1 of 2024. WB comment: This is a mammoth undertaking by TPR – hopefully a useful and more navigable Code will result. Click here for the article in February 2023 Pensions Compass. |
| HMRC | |
| Regulation of Pensions Tax Advice – HMRC’s proposals | On 23 March 2021 HMRC proposed that all tax advisers should have mandatory professional indemnity insurance, and how to define “tax advice” for these purposes. The Consultation closed on 15 June 2021. Subsequently HMRC announced it would not pursue mandatory insurance. HMRC continues to consider how best to protect consumers and to regulate tax advisers including tax agents. On 11 May 2023 HMRC published an updated Standards for Agents. |
| HMRC Newsletters re March 2023 Budget | On 16 March 2023, HMRC issued newsletter 148 relating to the abolition of the lifetime allowance charge and other changes announced in 15 March 2023 Budget. HMRC updated its guidance on 27 March 2023. In their newsletter 149 published 26 April 2023 HMRC commented further. Click here for the article in May 2023 Pensions Compass on the Budget 2023 changes and here for the article in Part 3 of this Pensions Compass on the replacement of the lifetime allowance regime. |
| HMRC Newsletter 152, July 2023; and HMRC Policy paper 22 November 2023 and Newsletter154 published 30 November 2023 | HMRC’s comments on the draft clauses for Finance Bill 2023-2024, (see under “Parliament” in this Pensions Compass). HMRC’s Policy paper issued on 22 November 2023 and Newsletter of 30 November 2023 comments on the abolition of the Lifetime Allowance and the new “allowances” regime. |
| PENSIONS DASHBOARDS | |
| Pensions Dashboards Programme (PDP) – Update October 2023 | PDP’s October 2023 Update confirms they are working on the draft Guidance for connection staging ahead of the statutory connection deadline of 31 October 2026. PDP are extensively testing their systems. It seems public access to Pensions Dashboards is unlikely much before 31 October 2026. |
| TPR – Updated Checklist for trustees | June 2023 TPR revised its Guidance in the light of the Dashboard Amendment Regulations which came into force on 9 August 2023. Click here for the article in Part 4 of July 2023 Pensions Compass entitled “Dashboards Dashed?” On 18 October 2023, TPR reissued its Checklist for schemes preparing for Pensions Dashboards. |
| OTHER DEVELOPMENTS | |
| DERIVATIVES Schemes using liability driven investment (LDI) | On 24 October 2022 the House of Commons’ Work and Pensions Committee (WPC) announced an Enquiry into pension funds with hedging portfolios. Click here for the article in December 2022 Pensions Compass on derivative investments. In the WPC Committee hearing on 22 March 2023 TPR stated that going forward it would collect more data on schemes LDI funds to help monitor systemic risk and to develop standards for LDI investment. The Bank of England’s Financial Policy Committee has published recommendations for maintaining resilience in view of the severe dislocation in the gilt market in autumn 2022 and the knock – on for some schemes LDIs portfolios, leading to Bank of England action. In November 2023, HM Treasury published a Call for Evidence about continuing the pension funds exemption from having to use central counterparties in connection with derivative contracts. The Call for Evidence closes on 5 January 2024. |
| DC VALUE Value for Money (“VFM”) for DC Pensions | On 30 January 2023 DWP, FCA and TPR issued a joint Consultation to obtain views on the “metrics, standards and public disclosure” of data required under the proposed VFM framework. The idea is to drive better retirement outcomes for DC members in relation to investment performance, costs and charges and quality of services and to support the consolidation of underperforming and poorly run schemes. The Consultation closed on 27 March 2023. The Government’s Response on 11 July 2023 supports these aims. DWP and FCA are expected to consult on proposed changes to existing Regulations to reflect VFM requirements but the government response set no timetable for this. |
| DC SMALL POTS | On 30 January 2023 DWP called for evidence on amalgamating deferred pensioner’s small pots. The Consultation closed on 27 March 2023. On 11 July 2023 the DWP Response and further Consultation proposed a Consolidator model under which Government would create a clearing house to match pots to member followed by allocation to consolidators; members would be given choice where possible; pots would be eligible for consolidation after 12 months of the last contribution with such pots being no larger than £1000. This further Consultation closed on 5 September 2023. WB comment: a grand design but legislation and bringing into effect is probably years away. Likewise, the initiatives on small pots announced as part of the Chancellor’s Autumn Statement on 22 November, click here for the article in Part 2 of this Pensions Compass. |
| CITY CODE ON TAKEOVERS and MERGERS Updated Code | On 20 May 2023, the Panel on Takeover and Mergers published the eleventh edition. As before, pension scheme trustees have a seat at the ring in the case of certain proposed corporate activity. |
| “MANSION HOUSE” REFORMS – Chancellor’s announcements on 10 July 2023 and Autumn Statement on 22 November 2023. | Major potential changes to the pensions landscape announced. With a General Election no later than January 2025, will there be time to make much headway? Possibly not. Click here for our News Bulletin issued on 18 July 2023 and here for our Bulletin issued on 24 November 2023. On 25 October 2023 in a speech to the Mansion House Pensions Summit, TPR explained its attitude to trustees’ investment strategies and said it would by the end of this year be “providing new guidance on investing in private markets”. In a blog on 27 November 2023, TPR commented on what it calls capital backed journey plans as an alternative to joining a superfund. Click here for the article in Part 4 of October 2023 Pensions Compass and here for our Update on the Mansion house reforms in Part 2 of this Pensions Compass. |
| Bank of England concern regarding Reinsurance overseas by UK insurers in the buy-out market | The Prudential Regulation Authority, supervisory arm of the Bank of England, has issued a Consultation on the risks of UK insurers reinsuring with overseas reinsurers. The Consultation closes on 16 February 2024. |