Welcome to our monthly update on current legal issues for trustees of DB and hybrid pension schemes, designed to help you stay up-to-date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We also have a separate DC-only briefing.

DB funding Code

The Pensions Regulator (TPR) has launched a 14‑week consultation on its revised DB funding Code of Practice, ending on 24 March 2023. The consultation package includes the draft Code and a document explaining TPR’s Fast Track approach, plus consultation questions and TPR’s response to its previous consultation (read more).

The draft Code sets out TPR’s expectations on the new funding and investment strategy and statement of strategy requirements; more detail on covenant assessment; and in-depth content for schemes on long-term planning, including how the new low dependency requirements (asset allocation and funding basis) should operate, both before and after a scheme’s point of significant maturity. It also sets out how the new ‘twin track’ approach to valuations will operate; in a change from the original proposals, the Fast Track parameters will be used as a filter to assess which schemes may require further regulatory intervention.

The Code is due to come into force on 1 October 2023 (applying to valuations with an effective date after that point).

ACTION: Review/arrange training on the draft Code; consider the impact on your funding approach and whether to respond to the consultation.

Market volatility: regulators’ guidance UPDATED

TPR has published guidance on actions it expects trustees to take regarding the impact of current economic conditions on DC benefits. The guidance focuses on improving member communications and support, strengthening governance and oversight, and ensuring investment strategies support stronger saver outcomes (read more).

A number of regulators, including TPR, have also recently released statements in relation to liability-driven investments (LDI) (read more). TPR’s statement – following on from its October guidance on managing investment and liquidity risk (read more) – comments on pension scheme governance arrangements, and sets out steps it expects schemes to implement.

PPF levy rules finalised NEW

The Pension Protection Fund (PPF) has finalised its 2023/24 levy rules and related documents, including those for certifying contingent assets/asset-backed contribution arrangements (ABCs) (read more).

ACTION: Consider whether your scheme needs to recertify any contingent assets/ABCs before the 31 March 2023 deadline.

DC transfers guidance UPDATED

TPR has updated its guidance on dealing with transfer requests, with changes aimed at helping schemes ensure that members receive the right advice to satisfy legislative requirements where an ‘amber flag’ is raised in relation to a transfer (read more).

The Pensions Administration Standards Association (PASA) has published good practice guidance on DC transfer processes. The guidance is voluntary, but PASA anticipates that the Pensions Ombudsman will use it as a reference point when reviewing complaints. The guidance includes example member communications, checklists and a transfer template (read more).

ACTION: Check your processes against the guidance.

Dashboards developments

Regulations setting out the requirements for dashboards and schemes interacting with them, including the staging deadlines for connection to the dashboards ecosystem, have been approved (read more).The Pensions Dashboards Programme has published a revised suite of standards (read more), along with responses to consultation on those standards (read more); a new consultation on design standards (read more); and an at-a-glance guide to the staging timetable (read more). In addition, the government has finalised guidance for schemes considering applying for deferral of their connection deadline (read more) and TPR has published a draft dashboards compliance and enforcement policy for consultation (read more).

ACTION: Ensure your scheme is taking steps to meet its dashboards requirements.

Have your say

• The PPF has launched a consultation on changes to the assumptions used when valuing a scheme after an employer has entered insolvency. The consultation closes on 20 February 2023 (read more).

Watch this space

• The government has consulted on changes to the notifiable events regime. There is currently no revised date for the delayed regulations (read more).
• TPR has consulted on its proposed single code of practice: watch our webinar on the proposals and read TPR’s interim response. Publication of the revised version of the code is expected soon.
• A revised code on transfers, and other materials from the Pension Scams Industry Group, are also awaited.
• Regulations removing certain performance-based fees from the DC default fund charge cap and making changes intended to increase investment in illiquid assets are expected early in 2023 (read more).
• TPR will be launching a joint consultation with the Financial Conduct Authority (FCA) and DWP on a Value for Money Framework in 2023.
• The Chancellor announced in the Autumn Statement that the results of a review of the current timetable to increase the state pension age will be published in early 2023.

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