Regular round-up of the latest pensions, investments, trusteeship and scheme management news

Current Issues - August 2023

02 Aug 2023 - Estimated reading time: 9 minutes

See excerpts from this month's articles below (to read more, please download our latest Current Issues). 

Lifetime allowance repeal

July 2023 saw the Government take steps toward abolishing the lifetime allowance, as announced in March’s Budget. The Finance (No. 2) Act 2023 put a stop to lifetime-allowance charges, effective from the start of the current tax year, whilst draft clauses destined for inclusion in next year’s Finance Bill would complete the task of expunging the allowance from legislation—although fossil evidence will remain/persist to prove its existence.

Mansion House reforms

On 10 July 2023 the Chancellor of the Exchequer, Jeremy Hunt, gave a speech at Mansion House, the official residence of the Lord Mayor of London. Hunt used the speech (his first) to announce reforms to the pensions market, intended to improve member outcomes whilst increasing funding availability for high-growth companies.

Value for Money framework: the Government & regulators’ response

The Department for Work and Pensions, The Pensions Regulator and Financial Conduct Authority issued a joint response to the consultation, Value for Money: A framework on metrics, standards and disclosures, that they published in January 2023. The framework will be put in place ‘when Parliamentary time allows’.

Supporting decumulation: proposed new trustee duties

The Department for Work and Pensions (DWP) has revealed plans to oblige defined contribution (DC) trustees to offer decumulation options consistent with the pension freedoms. They would have to provide a default solution for those who do not want to make complex decisions. Solutions could be offered either ‘in-house’, or by developing links with a third party.

Options for DB schemes: investments, surpluses & the PPF

The Department for Work and Pensions (DWP) called for evidence on how it might provide defined benefit (DB) trustees and sponsors with a wider range of options in areas such as investment, access to funding surpluses and consolidation. It plans to ‘go cautiously’ given the potential effects on the gilt market.

A statutory framework for DB superfund regulation

The Department for Work and Pensions (DWP) reported the outcome of a December 2018 consultation exercise on Consolidation of Defined Benefit Pension Schemes. It will proceed with plans for a statutory oversight regime for defined benefit (DB) commercial consolidation vehicles: ‘DB superfunds’.

Widening the field for CDC

The Department for Work and Pensions (DWP) has announced the outcome of a January 2023 consultation proposals for Extending opportunities for collective defined contribution pension schemes. It intends to relax the conditions for authorization of collective defined contribution (CDC) schemes, allowing establishment of schemes for unrelated employers. It will continue to explore the potential for ‘decumulation-only’ schemes.

Cultivating effective trustees

His Majesty’s Treasury (HMT) and the Department for Work and Pensions (DWP) have called for evidence on Pension trustee skills, capability, and culture. They are particularly interested in what is preventing some trustees from investing more in higher-returning assets.

Picking a peck of preferred pot-pooling providers

The Department for Work and Pensions (DWP) has aired plans for a system that will automatically consolidate small, deferred, defined contribution (DC) pension pots. It proposes to proceed with a ‘default consolidator’ approach, under which pots less than £1,000 that have lain dormant for at least twelve months will (unless the member demurs) be transferred to one of a panel of approved consolidator schemes, under the direction of a central clearing house.

Leveraging LGPS investment heft

The Department for Levelling Up, Housing and Communities (DLUHC) is consulting on the Next steps on investments for the Local Government Pension Scheme (LGPS) in England and Wales. It wants to accelerate the pooling of LGPS assets, as well as for funds to double their investments in private equity to 10%, and to plan to invest up to 5% of their assets in ‘levelling up’.

If you’d like to discuss anything covered in this publication, please get in touch.

Current Issues - August 2023


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